Distinguish between a rights offering and a warrant

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Reference no: EM13874270

PART 1?

1. Briefly discuss when an individual might find that the use of this tool would be advantageous

2. List and explain briefly the different methods by which "note" repayment may be scheduled

3. In each of the following circumstances regarding the use of promissory notes, answer "Yes" or "No" and briefly explain the reasoning behind your answer:

A. Can a promissory note actually be sold?

B. Can a "note" agreement specify a minimum period for which the balance will be outstanding?

C. Are loan forms for promissory notes readily available or very sparse?

PART 2

1. Explain what is meant when preferred dividends are "passed," and the implications for regular common stockholders of the company

2. Discuss the implication of "participating" preferred stock issue ownership

3. Identify the MAIN characteristic that differentiates payments issued by regular corporate bonds and those dividend payments of a preferred stock issue

4. Describe the risk profile of an investor who expresses above average interest in owning preferred stocks

PART 3

1. Distinguish between a rights offering and a warrant

2. Explain the significance of the fundamental (intrinsic) value that a warrant possesses

3. Briefly discuss how longer term (LEAPs) call options parallel some of the characteristics retained by warrants

4. Discuss how the use of leverage (as it relates to the exercise of a stock warrant) impacts the total return for an investor if: (a) the underlying stock price increases or (b) the underlying stock price decreases

Reference no: EM13874270

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