Introduction to
Mergers, Acquisitions,
& Other Restructuring
Activities
If you give a man a fish, you feed him for a day.
If you teach a man to fish, you feed him for a life time.
Lao Tze
Success is a Personal Choice
We can choose to be successful by
Set

CHAPTER 15
The Black-Scholes-Merton Model
Problem 15.2.
The volatility of a stock price is 30% per annum. What is the standard deviation of the
percentage price change in one trading day?
The standard deviation of the percentage price change in time
volat

CHAPTER 13
Binomial Trees
Problem 13.1.
A stock price is currently $40. It is known that at the end of one month it will be either $42 or
$38. The risk-free interest rate is 8% per annum with continuous compounding. What is the
value of a one-month Europe

CHAPTER 12
Trading Strategies Involving Options
Problem 12.1.
What is meant by a protective put? What position in call options is equivalent to a protective
put?
A protective put consists of a long position in a put option combined with a long position in

CHAPTER 10
Mechanics of Options Markets
Problem 10.2.
An investor sells a European call on a share for $4. The stock price is $47 and the strike
price is $50. Under what circumstances does the investor make a profit? Under what
circumstances will the opti

CHAPTER 11
Properties of Stock Options
Problem 11.1.
List the six factors affecting stock option prices.
The six factors affecting stock option prices are the stock price, strike price, risk-free interest
rate, volatility, time to maturity, and dividends.

Chapter 8
Securitization and the Credit Crisis of 2007
Problem 8.1.
What was the role of GNMA (Ginnie Mae) in the mortgage-backed securities market of the
1970s?
GNMA guaranteed qualifying mortgages against default and created securities that were sold
to

Trading Strategies
Involving Options
Strategies to be Considered
1) Bond plus option to create a
principal protected note
2) Stock plus an option
3) Two or more options of the same
type resulting in a spread
4) Two or more options of different
types resul

Properties of
Stock Options
Common Option Notation
c:
European call
option price
p: European put
option price
S0 Stock price today
:
K: Strike price
T: Life of option
: Volatility of stock
C: American call option
price
P: American put option
price
ST Stoc

Mechanics of
Options Markets
Review of Option Types
A call is an option to buy
A put is an option to sell
A European option can be
exercised only at the end of its
life
An American option can be
exercised at any time
Option Positions
Long call Short

Introduction to
Mergers, Acquisitions,
& Other Restructuring
Activities
If you give a man a fish, you feed him for a day.
If you teach a man to fish, you feed him for a life time.
Lao Tze
Success is a Personal Choice
We can choose to be successful by
Set

Negotiation: what we can learn from psychology
Useful principles:
#1. Negotiators are more likely to accept an offer that includes two small gains by the
other party than an offer that includes one gain that is equal in magnitude to two small
gains.
#2. N

FIN 4934, Fall 2015
Midterm Exam: Review Topics
These are topic areas and not the same as specific questions in the midterm
exam. There will be 10 exam questions which will emphasize your
understanding of the subject matters and not recitation of facts.
G

Part
I
_
_
The Mergers and
Acquisitions Environment
_
_
Chapter 1: Introduction to
Mergers, Acquisitions, and
Other Restructuring Activities
Chapter Summary and Learning Objectives
The purpose of this chapter is to provide students with an understanding o

Course description and policy:
Finance 4934: Mergers and Acquisitions, and a lot more.
Pre requisites: FIN 3403, and/or FIN 4424. You are expected to know how to do present
value calculations, and a working knowledge of routine finance functions, such as

FIN 4934-01 / FIN 5537-04: Derivatives and Risk Management
Homework 1 Solutions
1) Trader A enters into futures contracts to buy 1 million euros for 1.3 million dollars in three
months. Trader B enters in a forward contract to do the same thing. The excha