SArajevo School of science and technology Bear Stearns Collapse 2007 A short analysis ISMAR HOTA Table of Contents Introduction 3 Literature Review 3 Methodology 4 Analysis 5 Introduction 5 About Bear Stearns 6 The Culture at Bear Stearns 6 The Collapse of Bear Sterns 7 The Ethical Issues behind the Bear Stearns Collapse 8 What are subprime mortgages and its Ethical Failures? 8 The Lack of Corporate Governance at Bear Sterns 9 Moral Hazard at Bear Stearns 10 Non Ethical Conduct of the Regulators
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Bear Stearns & Co Page 1 of 10 Bear Stearns & Co Answer the following 10 questions‚ using the financial statement data from Blockbuster Entertainment Corporation. Show your work (i.e.‚ note what numbers you’re using). On May 9‚ 1989‚ Bear Stearns & Co. issued a report on Blockbuster Entertainment Corp.‚ which is reproduced in part below. Blockbuster-Entertainment (Ticker symbol: BV‚ Price per share: $33 ½) increased owned and franchised video stores from 19 at the end of 1986 to 415 at December
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1) What is Blockbuster’s amortization timetable? Do you think it is appropriate? Blockbuster’s amortization timetable is 40 years. This is not the industry standard and should be 5-7 years. 2) What would be the impact on Blockbuster’s 1988 earnings per share if 5 year amortization were applied to this goodwill? If the 5-year amortization were applied instead of the 40-year timetable‚ the company would have to recognize the goodwill in larger amounts‚ which would increase their tax liability. 3)
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Bear Stearns Bailout “The Fed did not bailout Bear at taxpayer expense‚ but enabled – as it is mandated – the financial markets to continue to function. History will call the Fed’s action the right move at the right time”‚ says Jeremy Siegel‚ Ph.D. The Bear Stearns Company began a financial meltdown in July 2007. By March 2008‚ it was ready to file Chapter 11 bankruptcy. Some people believe that the Federal Reserve should not have stepped in to bailout Bear Stearns because it was rewarding
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against any movements in the credit market (Bear Stearns and the Seeds of its Demise‚ 2008). The investment strategy of the High Grade Structured Credit Strategies Enhanced Master Fund was essentially the same as the one above; however‚ there was a greater investment into low-risk securities. Thus‚ increasing the amount of leverage to enable this additional investment. This investment would then create a higher return‚ but with limited risk (Bear Stearns and the Seeds of its Demise‚ 2008). 2
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The collapse of Bear Stearns: Five years on David Thomas 19 Mar 2013 This week five years ago‚ JP Morgan announced it would buy Wall Street rival Bear Stearns in a deal worth $2 a share – this ultimately rose to $10. Here‚ Financial News looks at the events in the run-up to the fall of the 85-year old independent investment bank. Financial News compiled the timeline from press releases‚ contemporary media reports and William D Cohan’s account of the collapse of the bank‚ ‘House of Cards’. May
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In 1935 the Public Utilities Holding Act was passed which led eventually to the breakup of privately held utility companies. Bear Stearns became an aggressive trader in the expanded market for securities being issued to place the utilities in public hands. In the 1940’s‚ the firm became a large player in mergers and acquisitions‚ particularly in the freight and transportation industries as cars and trucks began to replace railroads as the primary mover of people and freight. A once booming rail industry
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Background In the last three decades‚ the US banking system has changed its investment procedures and its risk management due to changes in government regulation. Furthermore‚ external shocks‚ such as the inflationary period during the 70s and the recession in the 80s‚ led Banking institutions to alternative ways of investment in order to remain profitable. The average annual inflation rate from 1900 to 1970 was approximately 2.5%. From 1970‚ however‚ the average rate hit about 6%‚ topping out
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The accounting issues surrounding mortgage backed securities and the collapse of Bear Stearns Table of Contents Executive Summary 3 Bear Stearns and their Activities Prior to its Collapse 4 Mortgage Backed Securities (MBS) and Collateralized Debt Obligations (CDO) 5 Accounting Theory‚ Mortgage Backed Securities‚ and the Collapse of Bear Stearns 6 The Offsetting Nature of Relevance and Reliability 7 Fair Value Accounting 9 Information Asymmetry 11 Adverse Selection 11 Moral Hazard
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INTERNATIONAL FINANCIAL SERVICES Coursework: Bear Stearns Case Study Student number: 6176194 Word count: 2381 Introduction Bear Stearns is an investment bank that was formed in 1923 by three partners namely: Robert Sterns‚ Joseph Bear and Harold Mayer. During its early stages‚ the
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