adjusted exercise price

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Adjusted exercise price

Term used in options on Ginnie Mae (Government National Mortgage Association) contracts. The final exercise price of the option accounts for the coupon rates carried on Ginnie Mae mortgages. For example, if the standard GNMA mortgage has an 9% yield, the price of GNMA pools with 13% mortgages in them is altered so that the investor receives the same yield.

Adjusted Exercise Price

1. The strike price on an option after making allowances for stock splits. For example, suppose the exercise price for an option is $400 and the company doubles the number of shares. The adjusted exercise price would drop to $200.

2. See: Nominal Exercise Price.

adjusted exercise price

The strike price of put and call options on Ginnie Mae pass through certificates. Ginnie Mae contracts are made up of mortgages that have interest rates that differ from the rate considered to be benchmark. These contracts must be adjusted in price to achieve that benchmark, and the exercise prices of options on the contracts must also be adjusted. This produces contracts that yield the benchmark interest rate at an exercise price.
References in periodicals archive ?
75 after June 30, 2008 which will be appropriately converted into warrants to purchase Tailwind common stock with adjusted strike prices, in each case pursuant to the terms of the Agreement and Plan of Merger, and expiring on June 30, 2009; -- The assumption of 428,083 outstanding Asset Alliance options with a weighted average strike price of $15.
Monmouth Capital's outstanding options and convertible debentures will remain outstanding and will become exercisable or convertible for Monmouth REIT's common stock at adjusted strike prices and conversion prices, as applicable, that reflect the exchange ratio.