This case provides students with the opportunity to evaluate the mechanics and effectiveness of interest rate swaps in an actual situation. Rothmans Inc. entered into an interest rate swap in 2001, and the company’s public statements allow readers to swap over several years followed until the eventual pay-off early in 2005. Students can decide whether the decision to leave the interest rate swap was good or bad early. Rothmans has only a five-year bank loan and interest r … Read more »

This case provides students with the opportunity to evaluate the mechanics and effectiveness of interest rate swaps in an actual situation. Rothmans Inc. entered into an interest rate swap in 2001, and the company’s public statements allow readers to swap over several years followed until the eventual pay-off early in 2005. Students can decide whether the decision to leave the interest rate swap was good or bad early. Rothmans has only a five-year bank loan and an interest rate swap for half the value of the loan. This simplicity provides an excellent learning environment with publicly available data.
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from
Karen Lightstone
Source: Ivey Publishing
7 pages.
Release Date: 28, August 2012. Prod #: W12164-PDF-ENG
Rothmans Inc. – The Curious Case of the interest rate swap HBR case solution