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The learning outcomes are as follows: to teach the concept of mutual fund as whole, how mutual fund works and who are the investors; discuss how any asset management company can work and what is their investment process; discuss how mutual funds are affected by changes in economic outlook/macro-economic variables; discuss the alternative risk-adjusted measures of performance evaluation, such as the Sharpe ratio, Treynor, Jensen’s alpha and measure of risk-adjusted performance; and discuss which index to use as a benchmark and how to improve funds’ performance.

In April 2019, Khaldoon Bin latif, Chief Executive Officer (CEO) of Faysal Asset Management, reflected on the changes that had occurred during his two and a half years at Faysal. He was quite pleased with the recent performance of Faysal Funds and the company’s relationship-oriented approach to money management for individuals with high net worth. Yet, he wanted to ensure that both the investment-process and performance-evaluation measures that he had implemented at Faysal would continue to provide superior returns. Latif also wanted Faysal to outperform the relevant indices, not only on an absolute basis, but also on a risk-adjusted basis. He pondered which indices and models Faysal should use in the future based on their performance.

Undergraduate/graduate

Teaching Notes are available for educators only.

CSS 1: Accounting and Finance.

Risk literacy matters for business students. A significant aspect of decision-making is accurately evaluating the risks involved in a decision. Research shows that many people are challenged to understand simple, health-relevant risk rates and probabilities. It also shows that many people are functionally innumerate, even educated people like doctors. While there is much academic work in health aimed at understanding how to communicate health risks to patients, an important personal area for business students, there are many industries and organizations where understanding risk is important for business students’ careers. This case provides opportunities for business students to practice these skills.

This is a secondary-data, compact case. The impetus for the case was a blog and the data gathered is primarily from Aviation Safety Net, Worldbank, Airlines.org, International Air Transport Association and Statista.com.

Coming across a blog headline, a professor is dismayed at the message: 2018 saw a sharp increase in air crash deaths. Questioning that the headline is appropriate and that the number of fatalities is an appropriate measure, the professor sets out to analyze airline safety data.

This case is intended for undergraduate or graduate students in an introductory business analytics course. The focus is on using and communicating risk rates and visualization.

Through the discussion of this case, students will have better understanding of the conceptual stakes related to accounting treatment for goodwill and factors determining goodwill impairment testing. The case also discusses the determination of the cost of capital and the impact of taking into account certain factors related to country risk for determining the discount rate in an international framework.

Greenfields Company continues to expand through acquisitions in emerging markets. The company aims to overcome the complexity of measuring goodwill subsequent to the initial recognition. The case was written to illustrate challenges of estimating the appropriate discount rate to be used in the goodwill impairment testing as investments in emerging countries give rise to many discount rate measurement problems such as the availability of statistical data and the risk assessment to be considered.

The case can be used at undergraduate or postgraduate level and it requires fundamental knowledge in accounting and corporate finance.

Teaching Notes are available for educators only.

CSS 1: Accounting and Finance.

This case serves as a foundation for student discussion of the estimation of required rates of return (ROR) on investments in emerging markets. An associate in J.P. Morgan's Latin America M&A department (mergers and acquisitions) is assigned the task of valuing the telephone directory operations (“paginas amarelas” means “yellow pages”) of a large Brazilian conglomerate. All cash flows have been converted to U.S. dollars, and present values computed for various discount rates. The remaining step is to determine the appropriate target rate of returns for dollar flows originating in Argentina, Brazil, and Chile. The capital asset pricing model (CAPM) is used along with a political risk premium and country beta. The necessary figure work is comparatively light, leaving the student time to reflect on the need for various adjustments in estimating crossborder rates of return.

In April 1992, this multinational consumer foods and beverages company is the focus of takeover rumors, which have prompted an assessment of the firm's returns. The student must choose among the principal methods of estimating the weighted-average cost of capital (WACC) for GrandMet and its three main business segments, and must then produce WACC estimates in order to evaluate the firm's performance.

It was early 2015 and executives in iShares' Factor Strategies Group were considering the launch of a new class of exchange-traded funds (ETFs) called smart beta funds. Specifically, the group was considering smart beta multifactor ETFs that would provide investors with simultaneous exposure to four fundamental factors that had shown themselves historically to be significant in driving stock returns: the stock market value of a firm, the relative value of a firm's financial position, the quality of a firm's financial position, and the momentum of a firm's stock price. The executives at iShares were unsure whether there would be demand in the marketplace for such multifactor ETFs, since their value added from an investor's portfolio perspective was unknown. Students will act as researchers for iShares' Factor Strategies Group and conduct detailed analysis of Fama and French's five-factor model and the momentum effect, smart beta ETFs including multifactor ETFs, and factor investing with smart beta ETFs to help iShares make its decision.

The case was created through personal interviews of the proprietor, Arzan Gandhi. The authors also researched data for investment advisory business along with current events relating to Indian stock market and its performance.

The case explores the fascinating entrepreneurial journey of Arzan Gandhi, 62 years old, from a cotton mill worker to an owner of a reputed investment advisory firm, “M/s A. N. Gandhi” in Ahmedabad, India. Reflecting upon the experiences that empowered Gandhi’s success in investment advisory business, students acquire an insight of real wealth creation challenges in business. Gandhi had to set the right priorities to take his business to the next level with intensified competition in the financial advisory field.

The case is best suited for graduate and post-graduate level courses on personal finance, financial planning elective or entrepreneurship. It is useful for teaching lessons on how financial planning and strategic decisions taken, through entrepreneurial traits and opportunity recognition helps in wealth creation and taking a venture to new heights.

The learning outcomes are as follows: to be able to evaluate early warning signs/red flags through financial statement analysis; to be able to analyse company’s credit or debt servicing using a thorough process of fundamental analysis; to be able to analyse and decode the financial health of an organization through different financial tools applicable according to the industry such as default probability and financial ratios; and to be able to synthesize credit rating framework and role of credit rating agencies in the bond market.

In late January 2019, the allegation by an online investigative portal about the misuse of the Dewan Housing Finance Corporation Ltd. (DHFL) money by its promoter for buying asset abroad was the start of the fall of the non-banking finance company giant. This was followed by a series of downgrade by credit rating agencies on its debt and eventual default on its interest payment on 4 June 2019 which upset multiple portfolio investors and the regulators. Investors became sceptical about the regulator’s policy and inefficiencies of credit rating agencies in predicting the default along with asset management houses which were expected to guard investors’ interest. One investor, Shikhar Pachori, decided to scrutinize all hidden information on DHFL to investigate if DHFL crisis arises because of unknown factors which was not in control of management or if it a clear negligence on the part of all involved parties. The case tries to emphasize the aspect of Asset-Liability Management and process of credit analysis while looking for red flags which aids in identifying any stress in company’s financial or any potential default by company.

This case can be used in the advance level of post-graduate finance course or MBA program for elective/specialization courses such as Financial Statement Analysis, Financial Institutions and Market and Fixed Income.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance

The case presents a financing dilemma at a fast growing, Brazilian construction company. The growing demand for residential and commercial real estate in Brazil, coupled with the capital intensive nature of the industry generates the need for a considerable external financing. The students are invited to take the perspective of the financial manager and evaluate three financing alternatives – an issue of debentures, a seasoned equity offering, and a capital-raising ADR offering. In their evaluation and final recommendation students need to consider the implications of each of the financing alternatives on firm value, equity risk, cost of capital, financial leverage, issuance costs, and ownership structure. The case also presents a valuable opportunity to discuss the interdependence between the institutional development of an economy and the development of its capital markets.

The learning outcomes of this paper is as follows: understand the issues that faced private Egyptian textile producers following the January 2011 revolution and how that impacted their business model. Evaluate whether Dice’s inorganic expansion through acquiring Alex Clothing Company is a sound strategic decision given the economic uncertainty in Egypt. Analyze the acquisition decision through projection evaluation techniques, including net present value (NPV), internal rate of return (IRR) and modified IRR (MIRR), to measure whether the acquisition will add value to Dice. Discuss non-financial issues post-acquisition that are not captured by traditional capital budgeting and project evaluation techniques.

Dice Manufacturing Company, an established and successful textile manufacturing family business, is facing an important investment decision with regard to inorganic expansion through the acquisition of Alex Clothing Company and its subsidiary United Dyers. The case is intended to be discussed in an undergraduate corporate finance class. The case setting is inside Dice Manufacturing Company, where one of the founders, Nagy Toma and his CFO Victor ElMalek are analyzing the acquisition decision in January 2015. The protagonist is Victor ElMalek, who has to recommend a course of action for the company owners. The case allows students to apply capital budgeting and project valuation methods to make a decision on whether the acquisition brings value to Dice and to analyze issues management can face post-acquisition. The case follows through the history of Dice, presenting its business model and changes that accompanied the 2011 revolution. It then moves on to outline the acquisition opportunity and provides data for students to analyze through traditional project valuation techniques, including NPV, IRR and MIRR.

Undergraduate.

CSS 1: Accounting and Finance.

Teaching notes are available for educators only.