Concept 21.6-2 Option on assets of the firm
Fundamentals of Corporate Finance
Berk, DeMarzo, and Harford
05th Edition
A share of stock is a ______ option written on the assets of the firm with the strike equal to ___.
A share of stock is a ______ option written on the assets of the firm with the strike equal to ___.
Debt holders of a corporation can be thought of as owning the firm but having ___ a call option on the assets of the firm with the strike equal to ___.
Equity holders have the incentive to ___ the volatility of the firm, which is a cost to ___.
Identify the false statement regarding options.
Given the information from the treasurer of a major US firm… figure out how much the investment would be worth in the US vs Great Britain.
Your numbers will vary.
Given the information on the company’s imported motherboards from Singapore… figure out the profit on the current exchange rate, increased exchange rate, decreased exchange rate, the break-even exchange rate, and the percentage if it rises or falls.
Your numbers will vary.
Given the information on the investment opportunity in Europe… figure out the NPV of the project.
Your numbers will vary.
Given assets, debt, equity, the different exchange rates… prepare the three different balance sheets.
Your numbers will vary.
Which statement is false after the shareholders of firm A offer 1 million shares valued at $10 each to acquire firm B, and stock A trades for $9 per share following the merger announcement?
What often drives acquisitions in line with the free-cash-flow theory of takeovers?