UBS, a global financial services company, must decide whether to continue to support the marketplace for Auction Rate Securities in the face of a growing financial disaster. These instruments, underwritten by UBS, were advertised to customers as highly liquid and safe alternatives to cash. UBS' decision becomes pressing when Citigroup, another leading underwriter of ARS, determines to let their auctions neglect, leaving illiquid assets of doubtful value to clients.
The case challenges students to assess the benefits of honoring implicit obligations to customers against the costs of acquiring billions of dollars in illiquid assets, and explores practical and theoretical aspects of liquidity risk. The (B) and (C) cases consider the consequences of UBS selection.
UBS and Auction Rate Securities (A) Case Study Solution
PUBLICATION DATE: March 05, 2009 PRODUCT #: 209119-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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