Case: Cougars (HBS Case 295006)
The purpose of a case is to challenge you to identify the key issues of the decision situation at hand. Here are a few pointers:
1. Why have riskless zero-coupon bonds been so successful with investors?
2. What relationship do the prices of riskless zero-coupon bonds have with the term structure of interest rates?
3. How are spot, strip and coupon yield related?
4. From the data in the case, reproduce implied spot curve. Compare it against Cougar Strip curve.
5. Discuss the role of bid-ask spread in those calculations.
6. How much value did A.G. Becker Paribas create for itself through the COUGARs offering? What was the source of this value? (Assume that the T-bill maturing on December 6, 1983 is trading at 8.11% discount yield on November 16, 1983.)
7. What advice would you give to Ms. Baker? Why?
You may organize and draft report in whichever way you see fit. If you feel that you have to make any assumptions, please do it by stating them clearly in your report.
Please note: Those questions are designed to guide you to important points in your analysis. What is important and what is not in the case itself is up to you to determine and is part of a challenge for this case.
I expect the report to be no longer than 6 pages plus appendices if necessary. Please use 11pt font or larger, decent line spacing and margins. You can also submit whatever supporting material you can see fit.
The purpose of a case is to challenge you to identify the key issues of the decision situation at hand. Here are a few pointers:
1. From the data in the case, reproduce implied spot curve. Compare it against Cougar Strip curve.
2. Discuss the role of bid-ask spread in those calculations.
3. How much value did A.G. Becker Paribas create for itself through the COUGARs offering? What was the source of this value? (Assume that the T-bill maturing on December 6, 1983 is trading at 8.11% discount yield on November 16, 1983.)
4. What advice would you give to Ms. Baker? Why?
You may organize and draft report in whichever way you see fit. If you feel that you have to make any assumptions, please do it by stating them clearly in your report.
Please note: Those questions are designed to guide you to important points in your analysis. What is important and what is not in the case itself is up to you to determine and is part of a challenge for this case.