Lessons from the Financial Crisis

W. Carl  Kester

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Lecture | 24 Jul 2009

Lessons from the Financial Crisis

by W. Carl Kester

Keywords: Financial Crisis;

Language: English

Format: Print

Citation:

Kester, W. Carl. "Lessons from the Financial Crisis." Lecture at the Nomura School of Advanced Management Reunion, Tokyo, Japan, July 24, 2009. (Reunion speaker.)

About the Author

W. Carl Kester

George Fisher Baker Jr. Professor of Business Administration

Finance

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Supplement | HBS Case Collection | January 2018

Capital Allocation at HCA

W. Carl Kester and Emily R. McComb

Citation:
Kester, W. Carl, and Emily R. McComb. "Capital Allocation at HCA." Harvard Business School Spreadsheet Supplement 218-716, January 2018. View Details

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Doing Business in South Africa

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Keywords: South Africa; South Africa;

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Abdelal, Rawi, Catherine S. M. Duggan, and Ian McKown Cornell. "Doing Business in South Africa." Harvard Business School Case 713-024, September 2012. (Revised January 2018.) View Details

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Supplement | HBS Case Collection | January 2013 (Revised April 2017)

Maxum Petroleum, Inc.

W. Carl Kester

Maxum seeks an oil-price hedging strategy that yields substantial cash during oil price spikes, is affordable under ordinary circumstances, and is easily managed. It is striving to avoid a repeat of the challenging situation encountered in 2008 when spiking oil prices resulted in substantial working capital buildup, heavy draw down in its bank credit lines, and missed investment opportunities. Students must differentiate among the income statement, balance sheet and cash flow effects of Maxum's exposure to oil prices, and understand the payoff profiles of various option hedges such as call writing and buying, costless collars, and "ratio writing" (unequal combinations of puts and calls). They are also challenged to design a hedging program that supports Maxum's growth and investment strategy by yielding substantial cash primarily during extreme oil price increases; imposes low or no costs otherwise; and does not require active, judgmental trading decisions to execute.

Keywords: Hedging; options; commodities; Credit Derivatives and Swaps; Risk Management; Futures and Commodity Futures; Financial Strategy; Volatility;

Citation:
Kester, W. Carl. "Maxum Petroleum, Inc." Harvard Business School Spreadsheet Supplement 213-714, January 2013. (Revised April 2017.) View Details

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Lessons from the Financial Crisis

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