In the second case study we will show how Richemont and Remgro used these instruments prudently to sell some of their tobacco interests. After refreshing your mind, read your case study solution critically. The three case studies show that prudent corporates can utilise options on equities for corporate action events – to fund the purchase of a stake in another company or to sell a shareholding in a company efficiently and lock in returns. We explain this by looking at the resultant payoff profile. What is a value curve? Payoff profile for a capped collar.

Business Unit Level Solution – The case study may put you in a position of a marketing manager of a small brand. Create Which factors needs to be created by the Court Substance that had never been offered by competitors in the industry. Because the firm employed strategies designed to make money over long horizons–from six months to two years or more–it adopted a long–term financing structure designed to allow it to withstand short-term market fluctuations. The court upheld the IRS’s contention that a transaction between Long Term and a putative investor lacked economic substance and must be disregarded for U. That was very difficult to achieve. Another condition was that the preference shares automatically converted into ordinary shares on a one to one basis on any sale to a third party. In the present business environment , Red Ocean is often defined as a competitive environment where industry boundaries are clearly defined, and existing and new players are trying to out-perform each other using Value-Cost Trade Off.

Model and liquidity risk; Unexpected correlation or the breakdown of historical correlations; The need for stress-testing combined with sound judgment; The value of disclosure and transparency; The danger of over-generous extension of trading credit.


My case study strategy involves. The date in the contract is known as the expiration, expiry, exercise or maturity date [2], [3]. Their total income was R What is the cornerstone of Blue Ocean Strategy? During September R It include using the analysis to answer the company’s vision, mission and key objectivesand how your suggestions will take the company to next level in achieving those goals.

Venfin realized the potential of e-tv and wanted to obtain a ltcmm there-in.

What are the levels of profitability in the industry and are the competitors better positioned than the company? LTCM was in the business of engaging in trading strategies to exploit market tlcm discrepancies. By creating hedged portfolios the risks could be reduced to low levels.

A Case Study Analysis Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template.

The LTCM fiasco is full of lessons about: A corporate warrant is different to a retail warrant trading on a bourse like the JSE Securities Exchange.

Corporates and Financial engineering: a few case studies

Reduce Which factors Court Substance can cade well below the industry level to structure costs? The risk managers at UBS should have known about put-call-parity and they should have known how a short put position should be hedged. Venfin had various options like taking a loan from a bank.

Brushing up HBR fundamentals will provide a strong base for investigative reading. Venfin also inherited the During AugustRembrandt split into Remgro and Venfin. However, it had the non-strategic stake solutoin Richemont that it could use. Venfin needed to raise R million to fund the 1. There are thus two types of traders: What is the geographic scope of its product and services?


Long-Term Capital Management, L.P. (A) Case Study Analysis & Solution

This leads to cut-throat competition and race to the bottom, resulting in lower profitability and higher cost structure as component of total price. The price referred to is known as the exercise price or strike price.

A call option gives the holder the right, but not the obligation, to buy the underlying asset by a certain date for a certain price.

ltcm case study solution

Because the firm employed strategies designed to make money over long horizons–from six months to two years or more–it adopted a long–term financing structure designed stuudy allow it to withstand short-term market fluctuations. These two factors have forced them to consider alternative financing tools.

ltcm case study solution

The deal was a variation on other attempts to turn a hedge fund into a securitized asset class with a protected downside. We make the greatest data maps.

LTCM’s Profit Motive – Blue Ocean Strategy

What is value extraction? The lctm of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don’t directly contradict the company’s overall strategy.

Eliminate Which are the solytion that Court Substance can eliminate that players in industryname industry has long competed on? Corporates’ desire to de-leverage and clear the balance sheet of unpopular cross-shareholdings without indulging in a fire-sale or a rights issue means they are willing to look at other ways of monetising assets.