Financial Bubble

1928 words 8 pages
National Chengchi University
Department of Finance
ETP Graduate Investments
Fall 2010

Case Discussion Questions

Instructor: Professor Edward H. Chow 周行一

Case study: financial bubble
Case: Trouble with a bubble (9-808-067)
1. Why did Irving Fisher believe that stock prices had reached a permanently high plateau?
2. Why did the stock market crash in 1929?
3. Why did influential individuals like Fisher, Keynes and Rockefeller believe that the downturn would only be temporary?

Case study: investment banking business and global financial crisis
Case: Investment banking in 2008 (A): Rise and fall of the Bear (KEL378)

1. What role did Bear’s culture play in its positioning vis-à-vis its competitors, and what role might that
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3, Develop a presentation to Henry Bosse using the analysis from the case.
4. An Excel data file is available on the website for students to use.

Case study: Market efficiency and investment strategy
Case: Dimensional Fund Advisors, 2002 (9-203-026)

1. What is DFA’s business strategy? What do you think of the firm? Are the DFA people really believers in efficient markets?
2. Do the Fama-French findings make sense? Should we expect small stocks to outperform large stocks in the future? Value stocks to outperform growth stocks?
3. Why has DFA’s small stock fund performed so well?
4. Is DFA’s tax-managed fund family likely to be successful, or remain just a small niche market?
5. What should be the firm’s strategy going forward?

Case Study: Security design and selection
Case: Corning: Convertible Preferred Stock (9-206-018)

1. Describe Corning’s business. How has the firm performed? What accounts for the changes in valuation in Corning stock in Exhibit 2? Trying to avoid hindsight bias-and this is very hard to do-could Corning’s troubles have been forecasted before 2001?
2. Evaluate Corning’s financing strategy. How has the firm raised capital in the past?
3. Why does Corning need to raise


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