Chapter 4: IMC

Down

• 2. Securities issued by a company that give the owner the right to subscribe for new shares in the company at a fixed price on a future date. Typically offered as a sweetener to other investments. Risky investment Warrant Value = Formula Value + Premium Val (8)
• 3. warrants in a company's shares issued by an organisation other than the company itself. Usually issued in diff currency than underlying shares. (7, 8)
• 4. special type of ordinary share where one or all rights are deferred. Worthless during deferral period. (8, 5)
• 5. Company distributes dividends greater than the current earnings per share by using previous years earnings. This is clearly not sustainable, signals that although times are tight they will get better. (9, 8)
• 6. WP = Prem / (1+%new) x size %new - percentage increase in number of shares when the warrant is exercised size - number of new shares created by the warrant (7, 1, 7)
• 7. attract pension funds and income seeking investors by offering a constant level of dividend. Can use dividend cover ratio to see if div income is stable. (6, 8, 6)