Boston Properties (B)
Posted: 2 Feb 2012
Date Written: April 5, 2011
The B case briefly recounts the action that investment manager Eliza Baena takes in the matter of the Boston Properties (BXP) bonds described in the A case. She must decide what to do next.
Learning Objective: This case may be used: to introduce convertible bonds; to introduce options and options pricing; to introduce payoff diagrams; to introduce the Law of One Price (LOOP) and explain arbitrage, riskless arbitrage, and no-arbitrage bounds; to describe the mechanics of exploiting violations of LOOP; to describe hedge fund financing arrangements; to introduce rehypothecation lending and margin lending and explain how these arrangements can create crisis or contagion among asset classes.
Suggested Citation: Suggested Citation