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.
Which is the least susceptible to adverse selection?
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?
Which concept is illustrated by a person in excellent health and with a long life expectancy opting for a lifetime annuity?
How might investors’ expectations of no synergy in a merger be indicated?
What potential consequence may mergers attempt to bootstrap earnings face when seeking increased current earnings per share?