Exam 14: Security Structures and Determining Enterprise Values

Which of the following offers the option where the dividend obligation can be satisfied in cash or by issuing additional par amounts of the preferred security?

Entity valuation allows us to answer the question of how much debt a venture needs to issue to achieve a target capital structure (D/V).

Convertible preferred stockholders have the right to convert a preferred share into a specified number of common shares at any time after the expiration date.

Which of the following is not a type of option?

A warrant is a type of call option.

The enterprise value includes the value of the debt,equity,and warrant pieces of a venture.

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

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

Which of the following stock can be structured to assure the shareholder that they will share in the payment of any dividends to common stockholders?

An option granting the right to sell a stock at $10 when that stock currently has a market price $8 is "in the money."

An American-style option is an option that can be exercised only at the expiration date

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

The Black and Scholes model requires the inflation rate as an input.

Convertible debt has all of the following except:

A warrant is a call option issued by a company granting the holder the right to buy common stock at a specific price at a specific time.

Convertible debt is debt that converts into preferred stock.

N(h)in the Black and Scholes model involves the use of

An option that can be exercised only at its expiration date is called a: