About This Chapter
Options & Corporate Finance - Chapter Summary
This chapter of short lessons covers the basics of options and option valuation. As you move through the lessons, you'll become familiar with concepts related to corporate securities, employee stock options, payoffs and more. You can take the included self-assessment quizzes to make sure you fully understand the material. By the end of the chapter, you'll have learned to:
- Differentiate between types of options, including puts and calls, stocks, and payoffs
- Understand the fundamentals of option valuation and the four factors that determine option value
- Evaluate the value and concept of employee stock options
- Compare warrants and call options and explain the value of a convertible bond
1. Options Basics: Stocks, Payoffs & Puts & Calls
Many people believe the financial markets are limited to buying and selling shares of stock. But, in addition to stock, there are other financial instruments. In this lesson, we'll learn about option contracts - one such variation of stock shares.
2. Fundamentals of Option Valuation
Option contracts are derivative financial instruments that obtain their value from an underlying asset - usually a stock. In this lesson, we'll discuss the components that are involved in determining the exact price of an options contract.
3. What Are Stock Options for Employees? - Value & Concept
There are many forms of employee compensation other than just a paycheck. Learn about employee stock options as a common form of incentive pay, including how to calculate the value and identify risks and benefits.
4. Comparing Warrants vs. Call Options in Corporate Securities
In this lesson, we'll compare warrants and call options in corporate securities, like stock shares and bonds, including how they create a return on an investment and how they work.
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Other chapters within the Finance 101: Principles of Finance course
- Introduction to Corporate Finance
- Financial Statements, Taxes & Cash Flow
- Financial Statement Basics
- Long-Term Financial Planning & Growth
- Introduction to Valuation Methods
- Discounted Cash Flow Valuation
- Interest Rates & Bond Valuation
- Stock Valuation
- Net Present Value & Investment Basics
- Capital Investment Decisions
- Accounting Risk & Return
- Return, Risk, & the Security Market Line
- Cost of Capital
- Financial Leverage & Capital Structure
- Dividends & Dividend Policy
- Short-Term Financing & Planning
- Cash & Liquidity Management
- Credit & Inventory Management
- International Corporate Finance
- Studying for Finance 101