What is a short sale?
Short sales involve selling shares not yet owned. This is permitted. When selling short, investors are borrowing the shares to be sold, which must be replaced later by buying them. Investors who sell short are bearish, hoping the shares go down in value so that they can be purchased later at a lower price than they were initially sought for.
What happens when you sell short stocks?
When selling short, investors are borrowing the shares to be sold, which must be replaced later by buying them. Investors who sell short are bearish, hoping the shares go down in value so that they can be purchased later at a lower price than they were initially sought for.
What is the fair market value of stock options?
The stock options are incentive stock options (ISOs). Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2013 and all restrictions on the free transferability had lapsed by the exercise date. None of the above.
How many shares of common stock did the company issue for $20?
Issued 2,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of$50,100. 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method.
How long is a security short term?
Rights offerings have a lifetime of 4 to 6 weeks, which makes them short term. If the end date is more than a year from the issue date, the security is long term.
What happens if the car writer does not exercise the call contract?
If the contract is not exercised by the owner, the writer keeps the premium. For calls, remember that as the underlying security rises in price, so will the price of the call contract; while good for the call owner, it is not good for the car writer. Reference: 2.1.3 in the License Exam Manuel.
Can underwriters distribute prospectus during cooling off period?
During the cooling-off period, underwriters may not distribute sales were advertising literature regarding the securities to be offered. However, they may distribute a preliminary prospectus intended to gather indications of interest and place tombstone ads. Reference: 1.4.4 in the License Exam Manuel.
