Questions from Corporate Finance

Q: What is measured by each of the five Greeks discussed in this

What is measured by each of the five Greeks discussed in this section?

Q: Discuss any differences in the evaluation of a replacement decision versus the

Discuss any differences in the evaluation of a replacement decision versus the evaluation of an expansion decision.

Q: Contrast the payoff from a put option with that from a call

Contrast the payoff from a put option with that from a call option.

Q: Explain how to estimate the intrinsic value and time value for a

Explain how to estimate the intrinsic value and time value for a put option.

Q: Briefly describe the main factors that affect a put or a call

Briefly describe the main factors that affect a put or a call option’s value, and explain how they affect the value of each.

Q: Illustrate how to combine the four basic option positions to create a

Illustrate how to combine the four basic option positions to create a variety of net payoff positions.

Q: Explain why the put-call parity relationship should hold if markets

Explain why the put-call parity relationship should hold if markets are efficient.

Q: Explain how to synthetically create long and short positions in calls,

Explain how to synthetically create long and short positions in calls, puts, and the underlying assets using put-call parity.

Q: You are a risk arbitrageur and you observe the following information about

You are a risk arbitrageur and you observe the following information about a deal: the current price of the target is $22 per share and the current price of the bidder is $16 per share. The bidder is...

Q: Explain why the lock-up period is an important consideration for

Explain why the lock-up period is an important consideration for investors, especially for issues that are still largely held by insiders.