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What is the motivation behind the call spread

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Reference no: EM132999633

-What is the motivation behind the call spread? Assuming conversion can only occur at the option's expiry, analyze the cost and the payoff of the call spread from the view point of Symantec.

-How should the $19.12 strike price options purchased by Symantec be priced?

-Should Symantec issue convertible notes? What are the pros and cons of convertible notes relative to straight notes?

-Why would Symantec not directly issue notes with a conversion price of $27.3175 per share instead of issuing notes with a conversion price of $19.12 coupled with a call spread?

-The "hedge participants" (the counterparties to the call spread) disclosed that in connection to the hedge transactions, they intended to purchase Symantec's stock in the secondary market prior to or following the pricing of the notes on June 12. What is the motivation behind such purchases? Can you quantify the number of shares the hedge participants need to purchase upon the issuance of the notes?

Reference no: EM132999633

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