Investment manager notices a large apparent discrepancy in the prices of two almost identical bonds issued in accordance with the basic leveraged buyout. The manager must determine if the tools are undervalued in relation to each other, and if so, how to capture the arbitrage profit from temporary anomalies. The case provides students with a variety of tools, ranging from very simple stripes treasury PIK debt. Encourages students to develop "arbitrage" positions and to understand the extent to which these items are risk-free. "Hide
by Peter Tufano Source: Harvard Business School 10 pages. Publication Date: June 18, 1992. Prod. #: 292129-PDF-ENG
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