1. Basic concepts Aa Aa Derivatives are securities whose prices are dependent on

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1. Basic concepts Aa Aa Derivatives are securities whose prices are dependent on one or more underlying assets. Since the value of the securities is derived from the value of the underlying assets, the securities are called derivatives. Some examples of derivatives are: options, convertible fixed-income securities, warrants, rights offering, and swaps. Based on your understanding, identify the type of each derivative described in the following table. Description Type of Derivative These are options given to current common shareholders. The [ options allow them to purchase additional shares of the company's common stock at a fixed price to maintain proportional ownership to prevent dilution. These securities are traded on organized exchanges, such as the | Chicago Mercantile Exchange and the Chicago Board Options Exchange. Their value depends on other assets, such as 30-year Treasury bonds or foreign currencies. These company securities get a fixed rate of return plus an opportunity for capital appreciation by allowing the owner of the shares the option to exchange them for a certain number of shares of the company's common stock. Flash Player WIN 27,0,0,183 03 3.34.1 © 2004-2016 Aplia. All rights reserved © 2013 Cengage Learning except as noted. All rights reserved. Grade It Now Save & Continue

Explanation / Answer

rghts option

future option

convertible Bond

Have answered to the best of my understanding. Expanding the options would help if the options above are unavailable

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