Description
In early 2014, Standard Chartered PLC, a British multinational banking and financial services company headquartered in London, England, announced its restructuring plan. The announcement triggered positive reactions in both stock and bond markets. Nevertheless, the eventual profitability was not what was expected. Moving forward into 2015, how would a rational investor have taken advantage of such a corporate restructuring event?
Learning Objective
This comprehensive investment case is suitable for undergraduate or graduate courses in investment or financial management. This case provides an assessment of possible investment strategies during a special corporate event and evaluates the strategies’ pros and cons. The case presents an opportunity for students to ·differentiate and evaluate the expected and realized performance of stock and bond investments; ·implement a long-short trading strategy in a stock investment; ·apply the concept of security lending in investment decisions; ·apply the market practice of shorting stocks in investment decisions; and, ·understand the impact of different investment horizons on investment profits.