Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
| American Options | A call or put option that can be exercised on or before its expiration date.
(See Refer to page 732, 829)
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| Call Option | The right to buy an asset at a fixed price during a particular time period.
(See Refer to page 819, 829)
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| Conversion Premium | Difference between the conversion price and the current stock price divided by the current stock price.
(See Refer to page 850)
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| Conversion Price | The dollar amount of a bond's par value that is exchangeable for one share of stock.
(See Refer to page 849)
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| Conversion Ratio | The number of shares per $1,000 bond received for conversion into stock.
(See Refer to page 849)
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| Conversion Value | The value of a convertible bond if it was immediately converted into common stock.
(See Refer to page 850)
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| Convertible Bond | A bond that can be exchanged for a fixed number of shares of stock for a specified amount of time.
(See Refer to page 849)
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| Exercising the Option | The act of buying or selling the underlying asset via the option contract.
(See Refer to page 829)
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| Expiration Date | The last day on which an option can be exercised.
(See Refer to page 829)
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| Intrinsic Value | The lower bound of an option's value, or what the option would be worth if it were about to expire.
(See Refer to page 835)
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| Option | A contract that gives its owner the right to buy or sell some asset at a fixed price on or before a given date.
(See Refer to page 828)
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| Put Option | The right to sell an asset at a fixed price during a particular period of time. The opposite of a call option.
(See Refer to page 819, 829)
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| Real Option | An option with payoffs in real goods.
(See Refer to page 856)
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| Straight Bond Value | The value of a convertible bond if it could not be converted into common stock.
(See Refer to page 850)
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| Striking Price | The fixed price in the option contract at which the holder can buy or sell the underlying asset. Also the exercise price or strike price.
(See Refer to page 829)
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| Sweeteners or Equity Kickers | A feature included in the terms of a new issue of debt or preferred shares to make the issue more attractive to initial investors.
(See Refer to page 845)
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| Warrant | A security that gives the holder the right to purchase shares of stock at a fixed price over a given period of time.
(See Refer to page 845)
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2002 McGraw-Hill Higher Education