Finding the right partner takes time. Don’t be discouraged if a partner you thought would be ideal does not work out. Companies should interview at least three potential partners before selecting one. In a way, it’s a lot like dating.You don’t necessarily marry the first person you go out with. In business, you don’t want to form a partnership with the first potential partner you meet. Someone better suited to your needs may come along at any moment.
In the Bank of America/Exult case, the bank knew it wanted to outsource its human resource capabilities and Exult wanted to demonstrate to others that it could manage a business on that scale. But as they explored their partnership, they discovered they might benefit in other ways. For example, Exult manages the payroll for many of its clients. Those payroll services could be managed through Bank of America, providing both seamless service for Exult’s clients and additional business for the bank.
Derivative contracts, in particular credit-linked notes on corporate bond indices, have a variety of uses: to gain synthetic exposure, as an arbitrage tool, to effect overlay strategies and to invest cash balances efficiently. The growing popularity of JECI and Trac-X as well as the exchange traded funds on the iBoxx Euro Liquid Corporate Index and the Goldman Sachs USD InvesTop Corporate Bond Index demonstrate the rising sophistication of market participants in the credit markets. They have realized that using a benchmark index that also has a liquid derivative contract can be of great benefit to investors.
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