 |  Fundamentals of Corporate Finance, 4/e 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
Options and Corporate Securities
Learning ObjectivesAfter studying this chapter in the textbook, you should be able to:
| Give the definitions for a put option and a call option. |
| | | | Be familiar with common stock option quotations. |
| | | | Illustrate the payoffs from a put and call option at maturity. |
| | | | Explain how to determine the upper and lower bounds on a call option's value. |
| | | | Compute the value of a call option based on the assumption that it is certain that the option will finish in the money. |
| | | | Compute the value of a call option based on the assumption that the option can finish in or out of the money. |
| | | | Be familiar with the effects on put and call option values caused by individual changes in each of the factors that influence option values. |
| | | | Explain why the equity of a levered firm can be valued as a call option on the value of the firm's assets. |
| | | | Explain what a warrant is and list some of the key differences between warrants and options. |
| | | | Define and discuss the key features of convertible bonds. |
| | | | For a convertible bond, compute its straight bond value, its conversion value and its floor value. |
| | | | Define and give examples of the term real options. |
| | | | (Appendix 25A) Compute the Black-Scholes value of a European call option. |
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2002 McGraw-Hill Higher Education