Congressional Oversight wants to value the warrants issued to the Government in connection with the TARP investment in 2008, to enhance the transparency options for repayment. The case describes the methodology used to value the warrants. Students have the opportunity to evaluate the warrants issued by the ten largest banks, as well as to assess whether the Black-Scholes model can be used for the value of these very long-lived (ten-year) options. Can be used to teach basic evaluation version of the Black-Scholes, but also raise questions of dynamic hedging of interest to advanced students. "Hide
by Carliss Y. Baldwin Source: Harvard Business School 14 pages. Publication Date: January 29, 2010. Prod. #: 210035-PDF-ENG
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