Quiz Ch 23 – T/F Convertible Bonds: Investor’s Stock Acquisition Option
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: With convertible bonds, investors have the option to exchange them for the firm’s stock.
True or false: With convertible bonds, investors have the option to exchange them for the firm’s stock.
True or false: Credit default swaps provide a means for investors to insure corporate bonds.
True or false: FASB mandates deducting the fair value of option grants, calculated using an option valuation model, in profit calculations.
True or false: FASB requires companies to treat employee stock options as expenses, similar to salaries and wages.
True or false: Safeguarding a bond, a government guarantee mirrors the value of a put option on the firm’s assets.
True or false: Option holders gain an advantage from the volatility of stock prices.
True or false: As the variability of the stock price decreases, the value of both call and put options increases.
True or false: The protective put strategy involves purchasing the stock while concurrently selling the put.
True or false: Using protective puts is a strategy to reduce the downside risk of holding stock.
True or false: The seller of a put option is expressing an expectation of a decline in the market value of the stock.