FIN 401 Study Guide - Midterm Guide: Interest Rate Cap And Floor, Forward Contract, Forward Price
Document Summary
Chapter 15- raising capital chapter 24- risk management and derivative securities. 2- increase value of these investments 3- contracts derivatives ownership=# shares held/total shares. Derivative: security or asset whose value is derived from some underlying security or asset. Types: forward contract buy future asset for price, future exchange forward contracts, American options: may be exercised on day up to and including expiry. Shares os/(rights amount/s) when you buy stocks you don t get the rights, price drops, rights trade on own [after ex right price do not include +1] Date: 4 days prior to holder of record. 1: # new shares issued= total funds raised/ subscription price. 2: # of rights to buy new share= #old shares/ # new shares. Seasonal offering: everyone knows the price per share, they are already investors ex) co wants to raise m equity 1-sell shares a-discount price (below mrkt price) b- flotation costs (transaction fe=5% (100/1-0. 05)=210. 5m) 2-
