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KIC000118 - Institutional Use of Options Markets I Options...

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Unformatted text preview: Institutional Use of Options Markets I Options as compensation How stock option compensation can destroy shareholder value I Managers may be enticed to manipulate the stock's price upwlrd in the near future “on if it adversely affect! the stock price in the Culture I l-l-. use “taunting method! that deter expenses and eweimte menu! reporting u Reporting option compensation as an expense I The FASB has been unwilling to require llrrns to report this expense en the inmmo statement I Enminpswiil appear higher when a firm up“ steak options to anprllfl'lB its men-gem iGlobalization of Options Markets 31 I Optionson stockindexas of venous countries as available " I The existence of options on foreign stock indexes allows portiolio managers to hedge or speculate based on forecasts of inreign 7 market conditions “ I Currencyoptiens contracts :3 A MIT-m rail option provides the flnhttn pummel; a specified eurmiuytor e specified prieewittiin I ppluiftld period ultimo u A Iamlncy put nption provides the right to sell e specified currency tar I specified prion within i specified period ultimo El ions use eummoy options to hedge [weigh psychics and maintain :1 Spam lam purchase put options on curlen oiea they expect to weaken against the dolilr ...
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