What are the similarities between options and warrants

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Reference no: EM13926711

1. Define the following terms:

a. Option

b. Call

c. Put

d. Contingent claim

2. What are the similarities and differences between options and warrants?

3. What variables are important in determining call option prices?

4. Will call option values generally be higher at a time when interest rates are rela- tively high, compared with a time when interest rates are relatively low, all other things being equal?

5. How does a stock's expected price volatility affect the value of a call option on it?

6. In what ways are convertible securities and warrants similar? Dissimilar?

7. Why do companies issue convertible securities?

8. What is the relationship between conversion value, bond value, and market value for a convertible security?

9. How can a company effectively force conversion of a convertible security?

10. What is the preemptive right of common stockholders? In what type of company is the preemptive right important? Unimportant?

11. Why would a firm use an interest rate swap as part of its financing strategy?

Reference no: EM13926711

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