Determine about the call and put option, Financial Management

Assignment Help:

Determine about the call and put option

A call/ put option provision allow both issuing company and investor to redeem the bonds at a specified amount before maturity date. Long term bonds (10 years or more) generally have a call/ put option is attached to bond which is (usually) exercisable after every 5 year intervals. In this case issuing company has a call option that it can call back the bonds and repay to investors the principal and interest due till that date. If issuer exercises his call option the investor has no recourse but to submit his bonds and get money. Likewise the investor has a put option, in which case he has an option to return the bonds and get principal and interest till that date. As in earlier case if investor exercises his option, company has no recourse though to pay the investor.

 


Related Discussions:- Determine about the call and put option

Explain about centralised treasury function, Q. Explain about Centralised t...

Q. Explain about Centralised treasury function? Treasury departments are usually a feature of larger companies than Frantic although it is perhaps beneficial to consider the be

Operating cycle, discuss the applicability of operating cycle in poultry in...

discuss the applicability of operating cycle in poultry industry

Dry up of liquidity and increased correlation, Hedge funds are short two ty...

Hedge funds are short two types of funding options. Describe in detail what these options are. Describe why these options become more valuable during a financial crisis. During

Tests for consistency, Tests for Consistency The consistency of the ind...

Tests for Consistency The consistency of the index numbers have been tested over the years. The most important of these tests are: The time reversal test The

Interpretations of duration, Duration is often referred to as the app...

Duration is often referred to as the approximate percentage change in the price for a 1% change in rates. Now, we will see some other definitions or interpretatio

Dual aspect concept - accounting principle, Dual Aspect Concept - Accountin...

Dual Aspect Concept - Accounting Principle This is, no doubt, the basic concept in accounting.  Under this concept, each transaction has got a two-fold aspect: (i) yielding

Calculate the net investment of the firm, Problem: i) Assume a firm bu...

Problem: i) Assume a firm buys a new tooling machine for Rs 2000,000, installation costs net of taxes are Rs 300,000. An existing asset has a book value of Rs 400,000 and the

Determine the financial requirements of the business, Q. Determine the fina...

Q. Determine the financial requirements of the business ? Decisive the Financial Needs: - The initial task of the financial management is to estimate and determine the financia

How can we calculate the average inventory, Inventory days (Average in...

Inventory days (Average inventory/Cost of sales) x 365days Average inventory can be arrived by taking this year's and last year's inventory values and dividing by 2 - (Ope

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd