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Convertibles, Warrants and Derivatives
External Growth through mergers
International Financial Management
Problems
Miscalaneous
100
A bond or share of preferred stock that can be converted into common stock at the option of the holder.
What is CONVERTIBLE SECURITY?
100
a combination of two or more companies in which the resulting firm maintains the identity of the acquiring company.
What is a MERGER?
100
MNC
What is MULTINATIONAL CORPORATION?
100
suppose a Swedish kronor is selling for $0.1286 and a Maltan lira i selling for $2.8148. What is the exchange rate (cross rate) of the Swedish kronor to the Maltan lira?
What is 21.89 Swedish kronor per Maltan lira?
100
a financial statement that measure the profitability of the firm over a time period
What is INCOME STATEMENT?
200
A ratio that indicates the number of shares of common stock into which debentures may be converted.
What is CONVERSION RATIO?
200
a combination of two or more companies to form a new entity.
What is CONSOLIDATION?
200
The relationship between two values of two currencies.
What is EXCHANGE RATE?
200
Suppose a Polish zloty is selling for $0.3399 and a British pound is selling for $1.448. What is the cross rate of Polish zloty to the British pound?
What is 4.4 Polish sloty to 1 British pound?
200
The phenomenon of prices increasing with the passage of time.
What is INFLATION?
300
par value divided by the bond conversion ratio
What is CONVERSION PRICE
300
a loss that can be carried forward for a number of years to offset future taxable income and perhaps be utilized by another firm in a merger or an acquisition.
What is TAX LOSS CARRYFORWARD?
300
A theory based on the interplay between inflation and exchange rates.
What is PURCHASING POWER PARITY?
300
Rockport Shipping Co. has warrants outstanding that allow the holder to purchase a share of stock for $16 (exercise price). The common stock is currently selling for $24, while the warrant is selling for $11.75 per share. a. What is the intrinsic (minimum) value of this warrant?
What is $8?
300
A long-term unsecured corporate bond.
What is DEBENTURE?
400
an option to buy a stated number of shares of common stock at a specified price over a given period of time.
What is a WARRANT?
400
a surprise offer made just before the market closes for the weekend and takes the target company's officers by surprise.
What is SATURDAY NIGHT SPECIAL?
400
a system of government accounts that catalogs the flow of economic transactions between the residents of one country and the residents of other countries.
What is BALANCE OF PAYMENTS?
400
National Motors, Inc., has warrants outstanding that allow the holder to purchase 1.5 shares of stock per warrant at $28 per share (exercise price). Thus, each individual share can be purchased at $28 with the warrant. The common stock is currently selling for $35. The warrant is selling for $14. a. What is the speculative premium on this warrant?
What is $3.50
400
a measure of the spread or dispersion of a series of numbers around the expected value.
What is STANDARD DEVIATION?
500
the right to buy or sell an underlying security at a set price over the time period.
What are OPTIONS?
500
A third firm that management calls on to help it avoid the initial unwanted tender offer.
What is WHITE KNIGHT?
500
dollars deposited in foreign banks
What are EURODOLLARS?
500
DNA Labs, Inc. has a $1,000 convertible bond outstanding that can be converted into 40 shares of common stock. The common stock is currently selling for $26.75 a share, and the convertible bond is selling for $1,118.50. a. What is the conversion value of the bond?
What is $1,070?
500
an analysis of performance that is made over a number of years in order to ascertain significant patterns.
What is TREND ANALYSIS?