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Although the question paper indicates tick value is €25, I noticed that 50 was used to calculate “gain on options” & “premium payable”. Is it because the period of investment is 6 mths? Therefore, the formula is tick value * (no. of investment period / option future contract period ) ?
Correct.
However there is no need to use ticks – I never do (as I explain in my free lectures on this).
John i have few queries realted to this question as well please help me out with these problems.
Since the question ask to calculate P/E ratio of T Co implied by terms of L intial and proposed offer. i repeat john its p/E ratio of T is asked with the terms of L. Then why in solution T shares are valued by price of L shares. i.e. $ 12.19 . i feel like it should be valued according to T and calculate p/e ration and then it adjusts with implied terms of L. please explain ?
In part c it says no extra finance is required if T shareholder take up the share offer.John can you please that with maybe from workings or else how it says that no extra finance is required ?
In comments it says if all five shareholder realise their investment instead of two the required cash is incrased by 512m. In its working how and from where they got 25% ?
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