Exam 14: Security Structures and Determining Enterprise Values

Which of the following is an example of a put option which is in the money?

Which of the following is never a component of a preferred stock's security structure?

Warrant valuation as presented in this text) is similar to option valuation except that one applies a dilution factor to the option value to arrive at a warrant value.

Which of the following is an example of a call option which is out of the money?

Which of the following is an example of a put option which is out of the money?

A European-Style Option may only be exercised on a specific date.

A preemptive right is a right for existing owners to buy sufficient shares to preserve their ownership share.

Convertible debt is debt that converts into preferred stock.

To calculate the enterprise valuation cash flow, one begins with which of the following items from the income statement?

Generally speaking, warrants are call options that allow the holder to purchase what type of security at a specific price?

The Black and Scholes model requires an exercise price as an input.

By issuing preferred stock, and thus forfeiting bankruptcy rights from the use of debt, the venture and its investors can benefit by committing to an internal reorganization as opposed to bankruptcy reorganization.

The right to buy a specified asset at a specified price on a specified date is called:

For preferred noncumulative stock, all previously unpaid preferred dividends must be paid before any common stock dividend is paid.

The Black and Scholes model is intended to be used to value

in the Black and Scholes model involves the use of

An alternative approach to the Enterprise Valuation method adds the tax shield from paying interest back into the flows and discounts at a before-tax weighted average cost of capital.

A round of financing where shares sell for a lower price than previous rounds is known as a:

As the underlying stock price increases in value, a put option to sell it becomes more valuable.