Chapter 16 & 17 Flashcards
(18 cards)
A bond that may be exchanged for or converted into stock
Convertible bond
Value of the bond in terms of stock into which the bond may be converted
Conversion value as stock
The value of a convertible as if it were non convertible debt
Investment value as debt
Preferred stock may be exchanged for or converted into common stock
Convertible preferred stock
A bond that the holder may redeem (sell back to the issuer) at a specified price and a specified time
Put bond
The right to buy or sell something at a specified price within a specified time period
Option
The date by which an option must be exercised
Expiration date
An option to buy stock at a specified price within a specified period of time
Call option
An option to sell stock at a specified price within a specified time period
Put option
What an option is worth as stock
Intrinsic value
The price at which the investor may buy or sell stock through an option
Exercise (strike) price
The market price of an option
Premium
Magnification of the potential return on an investment
Leverage
The amount by which an options price exceeds the potions intrinsic value
Time premium
Selling (writing) a call option for which the seller owns the securities
Covered option writing
Selling (writing)a call option without owning the underlying security
Naked option writing
Number of contracts with a specified strike price and expiration date on a particular stock
Open interest
An option issued by a company to buy its stock at a specified price within a specified time period
Warrant
