Name of Student Ankita Baburao Nighut

Class S Y MBA -B
Subject FDRM Case Study 2
Roll no. 63

FDRM Case Study 2: Margin Calls

Margin Call’s fictional investment firm made the same mistake that many real-life
companies did before the 2008 economic collap set. They were too heavily invested in a
single kind of flawed product. Clearest explanation of why you should be diversifying your
portfolio. Invest in a broad range of products and industries, and do as much research as
possible on what you’re buying ask an expert. This will cut down down on some of the risks
in your portfolio, and reduce the overall impact of the ups and downs of the market. Margin
Calls is the movie which tells first and foremost understanding about where money is going.
After receiving the marching orders to sell the firm’s soon-to-be valueless assets, trader Will
Emerson hits the phones: Hello gorgeous, he coos to a female client. Today, my loss is your
gain. She skeptical, and presses him to offer an explanation of why he’s selling. But Emerson
just keeps oozing on the charm until she relents.

When assets are sold at heavily discounted prices, it’s called a fire sale. Many investors
love finding these opportunities, since they follow the old buy low, sell high mantra. They
seek out undervalued products and buy them in bulk, hoping to make a quick profit when
their price eventually goes up. But before you start hoarding super-cheap stocks, ask yourself
why someone else is trying to offload them, especially if they’re in a hurry. Do they know
something you do not. the lesson tells us that beware while the sales. Crises, even the big
ones, can be weathered at the end of the flick, everyone in the firm is left wrestling with their
guilt. Even stone-faced Kevin Spacey is ready to jump ship and retire. But his boss won’t let
him. From Tule’s view, this crisis is similar to all the others.
If you borrow to invest, you can end up owing more than you’re worth:

Betting heavily on a single type of investment was the firm’s first big problem. They
actually borrowed money to snap up as many of these assets as they could get their hands on.
Once a junior staffer figures out their investments were worthless and that the rest of the
world is about to catch on the firm faces a potential loss greater than their entire market
value. Cue the drama. Under certain conditions, experts might recommend that you adopt a
borrow to invest strategy. Also called leverage investing, it’s where you take out credit to
purchase more stocks or bonds. Obviously, it’s pretty risky territory, but can be a very
powerful wealth building tool under the right conditions. It works for people who have a long
investment horizon and have the nerve to watch their account balance go up and down. Ask
yourself if you’re comfortable taking on the extra risk.

The Margin Call movie gives broad perspective of stock market changes on the
business, the movie gives overall idea about the business.

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