Search results
1 – 2 of 2The case is about an Indian company hedging soya oil price risk in the US futures market instead of in the Indian market to take advantage of better liquidity and wider choice of…
Abstract
The case is about an Indian company hedging soya oil price risk in the US futures market instead of in the Indian market to take advantage of better liquidity and wider choice of hedging instruments there. A stable long run relationship (cointegration) between the two markets appeared to make the cross border hedge viable, but hedge accounting considerations appeared to stand in the way.
Details
Keywords
Joshy Jacob and Jayanth R. Varma
After the global financial crisis of 2008, Allied Irish Banks (AIB) was rescued by the Irish government. During 2013 and 2014, the tiny fraction of shares remaining with the…
Abstract
After the global financial crisis of 2008, Allied Irish Banks (AIB) was rescued by the Irish government. During 2013 and 2014, the tiny fraction of shares remaining with the public appeared to be vastly overvalued in the Irish stock market. The American Depository Receipts (ADRs) of AIB appeared to be overvalued even relative to the inflated Irish price. The case illustrates the possibility of pervasive mispricing in an illiquid market and the difficulty of valuing companies with large embedded option values.
Details