Options Pt 1

Question 1

Warrant

Answer 1

Holder of a warrant has the right but not the obligation to buy a share of stock at a fixed price, on or before a certain date

Cannot have a negative value because it is exercised at owners discretion

Question 2

Put Option

Answer 2

Between owner and company

doesn’t change shares outstanding

Question 3

Call Option

Answer 3

Right but not obligation to buy shares for a fixed price on or before a certain data

No new shares created as it occurs between investor and owner

Question 4

Put Option

Answer 4

Right but not obligation to sell shares of stock for a fixed price

Does not impact shares outstanding as they are with investors

Question 5

Put Warrant

Answer 5

decrease shares outstanding because company repurchases stock

Question 6

Warrant vs Option

Answer 6

Warrant changes SOS and involves the company, option does not change SOS and is between investors

Question 7

Exercise / strike price

Answer 7

set price

Question 8

Maturity / expiration

Answer 8

set date

Question 9

European Options

Answer 9

Can only be exercised on expiration day

Question 10

American Option

Answer 10

Can be exercised any time up to and including the expiration day