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winter2010_notes_part5

winter2010_notes_part5 - Introduction to Corporate...

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1-1 Introduction to Corporate Applications There are three corporate contexts in which options appear, explicitly or implicitly Capital structure (equity, debt, and warrants) Compensation Acquisitions
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1-2 Equity, Debt and Warrants Firms often issue securities that have derivatives components For example, convertible debt is a bond coupled with a call option Even simple securities, such as ordinary debt and equity, can be viewed as derivatives
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