In general, if at the exercise date
the SP is more than the market price (MP), the investor would lose money on the transaction.
Therefore, a student could still theoretically take out a significant amount of loans and just purchase the option contract with the intention of never paying off the entirety of the loan by the exercise date
. The chance of students abusing this system could turn out to be too high.
In testing Hypotheses 1 and 2, we run this model on all options exercises between the vesting date and one month prior to expiration with the control variables defined in relation to the exercise date
. (1) The regression methodology used to estimate Equation (1) is the logit model.
The date on which the transaction occurs is known as the "exercise date
It also may be used to describe an arrangement like an SAR with a fixed exercise date
. The treatments described here reflect only the definition given above.
payment on the exercise date
of the future value of $3, in conjunction
Third party banks ("Loan Providers") propose to loan money to high net worth individuals ("Clients") to purchase insurance policies ("Policies") from life insurance companies and pay premiums due under an option agreement ("Put Option") to sell such Policy to a third party on a predetermined date ("Exercise Date
"), which will be at least two years from the date of the loan.
One of the keys, however, is the exercise date
, bringing us to the latest rage in corporate misbehavior--options backdating.
According to legal papers submitted to the state insurance department, the client wanted to be able to provide a "put option" agreement to the insured whereby the provider, a European hedge fund, would buy the policy on the exercise date
at a set price.
These instruments would have a fixed term, an exercise price equal to the price of common stock, and an exercise date
well into the future.
Another unique private company wrinkle is "phantom stock," a grant of the right to profit from appreciation of the company's profits or sales, with a fixed exercise date
and a formula for calculation.