Sm Ch 16

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CHAPTER 16

COMPLEX FINANCIAL INSTRUMENTS

ASSIGNMENT CLASSIFICATION TABLE

| | |Brief  | | | | | |Writing Assignments | |Topics | |Exercises | |Exercises | |Problems | | | | | | | | | | | | | |1. Stock options. | |16 | |15, 16, 17 | |10 | |2, 5 | |2. Derivative instruments for speculation | |1, 3, 4 | |1, 2 | |1, 2, 3, | |6, 7, 8, 9 | | | | | | | | | | | |3. Executory contracts | |2 | |3 | | | | | | | | | | | | | | | |4. Derivatives with an entity’s own shares | |4 | |4 | |4 | | | |5. Classification: debt vs. equity | |6, 7, 8, 9 | |5, 6,10, 14, | |6, 7, 9 | |2 | |6. Convertible debt and preferred shares. | |10, 11 | |7, 8, 9, 11, 12 | |8 | |2 | | | | | | | | | | | |7. Warrants and debt. | |12, 13 | |13 | | | |1, 2 | |*8. Derivative instruments for hedging. | | | |18, 19, 20 | |11, 12, 13 | |3, 4, 6 | | | | | | | | | | | |*9. Stock appreciation rights. | |17 | |21, 22, 23 | | | |5 | | | | | | | | | | |

*This material is dealt with in an Appendix to the chapter.

NOTE: If your students are solving the end-of-chapter material using a financial calculator or an Excel spreadsheet as opposed to the PV tables, please note that there will be a difference in amounts. Excel and financial calculators yield a more precise result as opposed to PV tables. The amounts used for the preparation of journal entries in solutions have been prepared from the results of calculations arrived at using the PV tables.

ASSIGNMENT CHARACTERISTICS TABLE

| | | | |Level of | |Time | |Item | |Description | |Difficulty | |(minutes) | | E16-1 | |Derivative transaction. | |Simple | |10-15 | | E16-2 | |Derivative transaction. | |Simple | |10-15 | | E16-3 | |Purchase Commitment | |Simple | |10-15 | | E16-4 | |Derivatives Involving Entity’s Own Shares | |Simple | |10-15 | | E16-5 | |Issuance and conversion of bonds. | |Moderate | |20-25 | | E16-6 | |Issuance and conversion of bonds. | |Moderate | |20-25 | | E16-7 | |Conversion of bonds....
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