Ivey Publishing

Product Details

Sleepless in L.A.
Product Number:
9B05N011
Publication Date:
08/12/2005
Revised Date:
10/04/2009
Length:
6 pages (3 pages of text)
Product Type:
Case (Gen Exp)
Source:
Ivey
A first year business school student has obtained a summer job as an analyst at a top investment bank in Los Angeles, California. His first assignment was the pricing of MicroComp's junk-bonds in the market place. Looking at the market value balance sheets, it was very clear that MicroComp was in financial distress. MicroComp's dept totaled $150 million, while the market value of its assets were $80 million. If MicroComp was required to repay its debt immediately, it would be forced into bankruptcy. Clearly, MicroComp was in effective default, why did its market capitalization remain at $5 million? Why had it not fallen to zero? Students will use option theory to answer these questions.
Issues:
Disciplines:
Finance
Industries:
Finance and Insurance
Setting:
United States, 2005
Intended Audience:
Undergraduate/MBA
Price:
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download
Associated Materials
Supplements: 7B05N011 (142 KB)
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