Management and Organizational Studies 3361A/B Chapter 16: Complex Financial Instruments

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3361A/B
• Professor: Michelle Loveland

Document Summary

Then baird investment corporation sells you, abalone inc. the right to purchase 1,000 laredo shares for per share. If the share price goes above , abalone will purchase from baird for and sell at the higher price. Purchase for ,000; sell for ,000 = ,000. March 31 (to record in value of option) The previous example assumed the shares were purchased at the option price and then immediately sold at the market price. Suppose instead that the company purchased the shares at the option price and kept the shares. 20,100: how to tell stock from bond, bonds will have a market rate, stock will have a dollar value for dividends. Derivatives involving the entity"s own shares: when a company buys or writes options dealing with its own shares or enter into forward contracts to buy or sell its own shares at a future date.