Advanced Corporate Finance and Modeling – FINA0065-1 Assignment #1 – Laura Martin: Real Options and the Cable Industry 1. Consider the multiples analysis developed in Exhibits 2‚5 & 6 Please describe the method of ‘Multiples’ using case numbers and answer to the following questions: 1.1. What assumptions does this analysis rely upon? 1.2. How is Martin’s regression analysis different from/similar to traditional multiples analysis? 1.3. Do you agree with her interpretation of the regression
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Issuing Stock Warrants to Investors: How Stock Option Warrants Work • When raising capital for a business venture‚ warrants are a common form of equity that is given to investors. A warrant is like an option - it gives the holder the right to buy a security at a fixed or formulaic price‚ which is known as the "exercise" or "strike" price. • Warrants are often confused with options. Options‚ as used in the venture capital space‚ are typically long term (up to 10 years). They are also typically
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he real option approach to investment decision making The real option approach to investment decision making does not provide a superior alternative to traditional methods Capital investment decisions are among the most important strategic decisions a company can make. Twenty years ago‚ managers began to realise that the traditional capital spending decision techniques such as discounting cash flow (DCF) were based on estimated revenues and costs and hence not appropriate in an uncertain arena
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payment will calculated as 38.88*P1.5. This final payment is like selling a put option to ABN AMRO bank with a strike price of $25.72 and a payoff of Min (1000‚ 38.88* P1.5). Hence the investors are actually being offered a bond and a short put option. The RES value should be the difference in the value of the bond and the value of the put option. Given the price of the RES‚ we can calculate the fair value of the put option and the bond to see whether ABN AMRO bank has made a profit from it. Assuming
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19-29 Diluted Earnings per Share 30-63 Earnings 33-35 Shares 36-40 Dilutive Potential Ordinary Shares 41-63 Options‚ warrants and their equivalents 45-48 Convertible instruments 49-51 Contingently issuable shares 52-57 Contracts that may be settled in ordinary shares or cash 58-61 Purchased options 62 Written put
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Laura Martin: Real Options and the Cable Industry Introduction Laura Martin‚ an equity research analyst for cable stocks‚ believes that the best way to value cable stocks is through creative methods such as real options and not through more traditional or typical valuation methods such as EBITDA multiples‚ ROIC analysis and DCF analysis. In 1999 she presented at the Credit Suisse First Boston Broadband conference‚ where she wanted to portray the message that real options is a superior valuation
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of Options‚ Restricted Stock‚ and Cash for Employee Compensation Paul Oyer and Scott Schaefer September 4‚ 2003 Abstract Using a detailed data set of employee stock option grants‚ we compare observed stock-optionbased pay plans to hypothetical cash-only or restricted-stock-based plans. We make a variety of assumptions regarding the possible bene ts of options relative to cash or stock‚ and then use observed option grants to make inferences regarding rms ’ decisions to issue options to
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The six forms of deferred (stock) compensation include: Incentive stock options‚ Non-statutory stock options‚ Restricted stock‚ Phantom stock plans‚ Discount stock options‚ and Stock appreciation rights. Incentive stock options entitle executives to purchase their companies’ stock in the future at a predetermined price. Compared to incentive stock options‚ non-statutory stock options do not qualify for favorable tax treatment. Executives’ pay income taxes on the difference between the discounted
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On January 1‚ 2006 Sooner or Later Inc. granted $1‚000 at-the-money employee stock options. To ensure that the company can afford to compensate their employees based on their financial performance the award will only be absolute if the revenue over the following three years is greater than 10 million dollars and if the employees are still employed with the company. Sooner or Later’s management believes that the company will have revenues in excess of 10 million dollars over the next three year period
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ur a lil puts putssssssssssssssssss "Tha Block is Hot" [Lil’ Wayne] Wha wha‚ wha wha‚ wha wha‚ wha wha‚ what Straight off the black gold‚ nuts in my hand‚ trustin no man Got my glock cocked‚ runnin this thing‚ ya understand We be steamin‚ blazin‚ nines pumped in caves and Hollygrove 17th‚ the hood where I was raised in Niggaz bustin heads and‚ runnin duckin Feds and rocks under they tongues and‚ ki’s under they beds and do it for the real niggaz‚ twenty-four seven hustlers
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