Locked Tight Storage Facilities Harvard Case Solution & Analysis

Locked Tight Storage Facilities Case Solution

This is a Darden case study. This instance provides the opportunity to introduce and implement the pure-expectations theory of interest rates.
In addition, it brings out the basics of option pricing by contemplating the refinancing choice embedded in the long term mortgage choice. Due to the refinancing choice, the spread charged by the bank for the long term mortgage is too low, which indicates an arbitrage opportunity can be found by building a "home made" interest-rate swap.

This is just an excerpt. This case is about   FINANCE & ACCOUNTING

PUBLICATION DATE: February 19, 1996

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