chap024 - CHAPTER 24 WARRANTS AND CONVERTIBLES SLIDES 24.1...

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CHAPTER 24 WARRANTS AND CONVERTIBLES SLIDES CHAPTER ORGANIZATION 24.1 Warrants 24.2 The Difference between Warrants and Call Options How the Firm Can Hurt Warrant Holders 24.3 Warrant Pricing and the Black-Scholes Model 24.4 Convertible Bonds 24.1 Key Concepts and Skills 24.2 Chapter Outline 24.3 Warrants 24.4 Warrants 24.5 The Difference between Warrants and Call Options 24.6 Dilution Example 24.7 Dilution Example 24.8 Dilution Example 24.9 Dilution Example 24.10 Warrant Pricing and the Black-Scholes Model 24.11 Warrant Pricing and the Black-Scholes Model 24.12 Warrant Pricing and the Black-Scholes Model 24.13 Warrant Pricing and the Black-Scholes Model 24.14 Convertible Bonds 24.15 The Value of Convertible Bonds 24.16 Convertible Bond Example 24.17 Convertible Bond Example 24.18 The Value of Convertible Bonds 24.19 Reasons for Issuing Warrants and Convertibles 24.20 Convertible Debt vs. Straight Debt 24.21 Convertible Debt vs. Straight Equity 24.22 Why Are Warrants and Convertibles Issued? 24.23 Conversion Policy 24.24 Quick Quiz
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24.5 The Value of Convertible Bonds Straight Bond Value Conversion Value Option Value 24.6 Reasons for Issuing Warrants and Convertibles Convertible Debt versus Straight Debt Convertible Debt versus Common Stock The “Free Lunch” Story The “Expensive Lunch” Story A Reconciliation 24.7 Why Are Warrants and Convertibles Issued? Matching Cash Flows Risk Synergy Agency Costs Backdoor Equity 24.8 Conversion Policy ANNOTATED CHAPTER OUTLINE Slide 24.0 Chapter 24 Title Slide Slide 24.1 Key Concepts and Skills Slide 24.2 Chapter Outline 24.1. Warrants Slide 24.3 – Slide 24.4 Warrants Warrant – security issued by firms that gives the holder the right, but not the obligation, to purchase the common stock directly from the company at a fixed price for a given period. May be used as sweeteners or equity kickers – warrants issued in combination with privately placed loans or bonds, public issues of bonds, and new stock issues. Similarities between warrants and options: 1. Both are American call options on the equity of the firm. 2. Both are usually protected against stock dividends and stock splits. 3. Neither is protected against cash dividends.
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This note was uploaded on 12/21/2011 for the course NIKA 101 taught by Professor Temur during the Spring '11 term at Acton School of Business.

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chap024 - CHAPTER 24 WARRANTS AND CONVERTIBLES SLIDES 24.1...

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