A hedge-fund strategist had two choices to make. First, what was the path of core euro zone long term interest rates likely to be over the next year? Was the dramatic fall in German long rates over the last two years an aberration that will soon be reversed, or was it part of the "new normal" that would last for some time?
Second, how would periphery long rates evolve relative to core rates? Was the remarkable divergence in euro zone long rates likely to prevail, or would the forthcoming year see a reconvergence? He knew many factors affected long term interest rates; he would have to make utilization of his entire toolkit to deal with this dilemma. The evidence was in no way clear-cut. Some factors pointed toward lower German rates, some toward higher, some toward a widening of euro zone spreads (even a dissolution of the euro zone as we know it?), and some toward reconvergence. To form an opinion on the likely paths of euro zone rates that are long, he would have to sort through mounds of information.
PUBLICATION DATE: March 07, 2011 PRODUCT #: UV5691-PDF-ENG
This is just an excerpt. This case is about GLOBAL BUSINESS
Related Case Solutions & Analyses:
Arborite
World to Mexico–Get a Grip
African Communications Group
Harvey Golub: Recharging American Express
U.S. Auto Industry: Scenarios and Choices for the 1990s
Technology Transfer at a Defense Contractor (Abridged)
CASE STUDY ON KELLOGG’S MARKETING TACTICS, PROBLEMS AND THEIR SOLUTIONS
VERENA LEARNING (A) : INFORMATION TECHNOLOGY OUTSOURCING AND CLOUD COMPUTING
SO MUCH THOUGHT, SO LITTLE SAID
GEEKIE: REVOLUTIONISING BRAZILIAN EDUCATION SYSTEM
