sally jameson case

[pn]

anyone started reading on this case yet?

Firstly the website www.firstsecuritycapital.com does not exist anymore.   There seems to be very little information about this on the web.

I read in other articles that  "unregulated" stock loans are essentially an extremely risky proposition with the borrower actually having to transfer the title of the shares to the lender. 

The questions are perplexing.  It is asking us to analyze from FSC's point of view....

Any inputs or thoughts on getting started?

Thanks
Padma

[Shashank Saggar]

Hi Padma,

I plan to read the case tonight/tomorrow and do some initial analysis. Do you want to get on a conference call on Sunday afternoon and discuss?

Does noon on Sunday work?

Shashank

[pn]

Sure...just a reminder, this case is due on Monday and not on Wednesday...

[Robert Binkley]

Maybe we could meet sat am after the q and a session?

-r

This email and any attachments are intended for the sole use of the named recipient(s) and contain(s) confidential information that may be proprietary, privileged or copyrighted under applicable law. If you are not the intended recipient, do not read, copy, or forward this email message or any attachments. Delete this email message and any attachments immediately.

[pad...@gmail.com]

That works too...fine by me

Padma

Sent via BlackBerry by AT&T

---

From: Robert Binkley <Robert....@xilinx.com>

Sender: fnc_455_s...@googlegroups.com

Date: Fri, 6 May 2011 14:52:12 -0700

To: <fnc_455_s...@googlegroups.com>; <fnc_455_s...@googlegroups.com>

ReplyTo: fnc_455_s...@googlegroups.com

Subject: RE: sally jameson case

[Vince]

same here, extremly limited material on the 90% stock loan http://findarticles.com/p/articles/mi_m0EIN/is_1998_Nov_19/ai_53238839/ "This loan product gives investors unprecedented liquidity without triggering taxes, allows them remain invested, and they can sleep at night knowing their investments are protected -- even if th market were to drop 1,500 points again like it did earlier this fall," says Dr. Charles Cathcart, President of First Security Capital and a nationally recognized financial authority. Available at http://www.firstsecuritycapital.com, this innovative strategy empowers individual investors by enabling them to get 90% of the value of their stocks in cash -- without selling or triggering taxes -- and simultaneously limits their downside risk to only 10%. --- On Fri, 5/6/11, pn <pad...@gmail.com> wrote:

[Robert Binkley]

I reserved room 300c for 11:00 – 1:00 in the event we cannot stay in the classroom.

 

Robert

[Pavani Ganeshula]

Hi,

Can anyone tell at what time is the finance class tomorrow? and in which room?

--
Regards,
Pavani Ganeshula

[sundar]

Pardon my ignorance. Is the Q & A session scheduled in our regular
class room (LH 209) or elsewhere? Please confirm.
Sundar

On May 6, 4:01 pm, Robert Binkley <Robert.Bink...@xilinx.com> wrote:
> I reserved room 300c for 11:00 – 1:00 in the event we cannot stay in the classroom.
>
> Robert
>

> From: fnc_455_s...@googlegroups.com [mailto:fnc_455_s...@googlegroups.com] On Behalf Of padm...@gmail.com
> Sent: Friday, May 06, 2011 3:00 PM
> To: fnc_455_s...@googlegroups.com
> Subject: Re: sally jameson case
>
> That works too...fine by me
>
> Padma
>
> Sent via BlackBerry by AT&T
>
> ________________________________
>

> From: Robert Binkley <Robert.Bink...@xilinx.com>
>
> Sender: fnc_455_s...@googlegroups.com
>
> Date: Fri, 6 May 2011 14:52:12 -0700
>
> To: <fnc_455_s...@googlegroups.com>; <fnc_455_s...@googlegroups.com>
>
> ReplyTo: fnc_455_s...@googlegroups.com
>
> Subject: RE: sally jameson case
>
> Maybe we could meet sat am after the q and a session?
>
> -r
>
>
>
>
>
>
>
>  -----Original Message-----
> From:   pn [mailto:padm...@gmail.com]
> Sent:   Friday, May 06, 2011 02:41 PM Pacific Standard Time
> To:     fnc_455_s...@googlegroups.com
> Subject:        Re: sally jameson case
>
> Sure...just a reminder, this case is due on Monday and not on Wednesday...
>

> On Fri, May 6, 2011 at 2:36 PM, Shashank Saggar <shankssag...@gmail.com>wrote:
>
> > Hi Padma,
>
> > I plan to read the case tonight/tomorrow and do some initial analysis. Do
> > you want to get on a conference call on Sunday afternoon and discuss?
>
> > Does noon on Sunday work?
>
> > Shashank
>
> > On May 6, 2011, at 5:04 PM, pn wrote:
>
> > anyone started reading on this case yet?
>

> > Firstly the websitewww.firstsecuritycapital.comdoes not exist anymore.

[Rob Sidhu]

room 307 at 10:00 AM, if i'm not mistaken...

[Pavani Ganeshula]

Thanks Rob!

--
Regards,
Pavani Ganeshula

[alex smirnov]

I realized that I skipped pg 307 of the book when I sent the link to chapters 18-19.  Here's a complete file.  I'm sorry.

http://dl.dropbox.com/u/9325434/School/Financial%20Instruments%20and%20Markets%20CH%2018-19.pdf

Alex

p.s. I'll bring a few printed copies of that page with me to the review session

[shashank saggar]

Can anyone share notes from what you guys discussed today about the case?

[pn]

I left a bit early and didn't stay for the discussion...

can we still aim for the discussion tomorrow via web?

Padma

[sundar]

Count me in. What time?

On May 7, 3:15 pm, pn <padm...@gmail.com> wrote:
> I left a bit early and didn't stay for the discussion...
>
> can we still aim for the discussion tomorrow via web?
>
> Padma
>

> On Sat, May 7, 2011 at 2:32 PM, shashank saggar <shankssag...@gmail.com>wrote:
>
>
>
>
>
>
>
> > Can anyone share notes from what you guys discussed today about the case?

> > On May 7, 2011 12:45 PM, "alex smirnov" <alex.smir...@gmail.com> wrote:
> > > I realized that I skipped pg 307 of the book when I sent the link to
> > > chapters 18-19. Here's a complete file. I'm sorry.
>

> >http://dl.dropbox.com/u/9325434/School/Financial%20Instruments%20and%...

>
> > > Alex
>
> > > p.s. I'll bring a few printed copies of that page with me to the review
> > > session
>
> > > On Fri, May 6, 2011 at 11:26 PM, Pavani Ganeshula <

> > pavaniganesh...@gmail.com
> > >> wrote:
>
> > >> Thanks Rob!
>
> > >> On Fri, May 6, 2011 at 11:24 PM, Rob Sidhu <rob_sid...@yahoo.com>

> > wrote:
>
> > >>> room 307 at 10:00 AM, if i'm not mistaken...
>

> > >>> >>> Firstly the websitewww.firstsecuritycapital.comdoesnot exist

[shashank saggar]

How about tomorrow at 6?

[pn]

6:00 Sounds fine.

Using black scholes, I am getting the call option price of $28.  Not sure if I am on the right track here..

Anyone else get this?

Thanks
Padma

[sundar]

Padma,
What are your assumptions for s, k, r, v and T?
Thanks,
sundar

On May 7, 11:23 pm, pn <padm...@gmail.com> wrote:
> 6:00 Sounds fine.
>
> Using black scholes, I am getting the call option price of $28.  Not sure if
> I am on the right track here..
>
> Anyone else get this?
>
> Thanks
> Padma
>

> On Sat, May 7, 2011 at 5:19 PM, shashank saggar <shankssag...@gmail.com>wrote:
>
>
>
>
>
>
>
> > How about tomorrow at 6?

[pn]

78.5, 75, 5.85%, 41%, 3

[sundar]

This is what I'm getting.
s 78.5
k 75
r 5.85%
v 41.00%
T 3

d1 0.65947334
d2 -0.050667491

C 23.52004048

The excel formula that i'm using is as below

d1 = (LN(C5/C6)+(LN(1+C7)+(C8^2)/2)*C9)/(C8*SQRT(C9))

d2 = C11-C8*SQRT(C9)

C = =C5*NORMSDIST(C11)-PV(LN(1+C7)/12,6,0,-C6)*NORMSDIST(C12)

Note: All the values are in column C starting at row 5 in excel.

On a side note, I wasn't able to get the same value for call option as
the example on page300. My only suspicion is the formula i'm using to
compute the PV.

Sundar
The

[Suraj Ayinikatt]

Sundar,

for 

PV(LN(1+C7)/12,6,0,-C6)

try this discounting

(C6/POWER(1+C7,C9))

 

Suraj Ayinikatt

---

From: sundar <kmsun...@gmail.com>
To: FNC_455_spring_2011 <fnc_455_s...@googlegroups.com>
Sent: Sun, May 8, 2011 12:34:26 PM

[sundar]

Found the issue. The annualized daily compounded rate is ln(1.0585).
Hence periodic rate for daily compounding will be ln(1.0585)/365 and
the number of period will be 365 * # of years = 365*3.

Hence the corrected values for PV should be PV(LN(1+C7)/365,C9*365,0,-
C6). Note: We have to use Ln(1+C7) to get the annualized daily
compounded rate correctly.

Once i corrected this i'm getting 28.15608797

Is this what you are getting?

Thanks,
Sundar

[Dinesh Kantaria]

Shashank,

Are we suppose to use the same instructions from the last week for the call at 6?

Thanks,

Dinesh

[sundar]

i've setup one for this discussion.

Call 866-678-8001
Meeting ID: 1234

Please get started. I might join a little late.

Sundar

On May 8, 4:30 pm, Dinesh Kantaria <dkanta...@gmail.com> wrote:
> Shashank,
>
> Are we suppose to use the same instructions from the last week for the call at 6?
>
> Thanks,
>
> Dinesh
> On May 7, 2011, at 5:19 PM, shashank saggar wrote:
>
>
>
>
>
>
>
> > How about tomorrow at 6?
>

[sundar]

i've setup one for this discussion.

Call 866-678-8001
Meeting ID: 1234

Please get started. I might join a little late.

Sundar

On May 8, 4:30 pm, Dinesh Kantaria <dkanta...@gmail.com> wrote:

> Shashank,
>
> Are we suppose to use the same instructions from the last week for the call at 6?
>
> Thanks,
>
> Dinesh
> On May 7, 2011, at 5:19 PM, shashank saggar wrote:
>
>
>
>
>
>
>
> > How about tomorrow at 6?
>

[sundar]

i've setup one for this discussion.

Call 866-678-8001
Meeting ID: 1234

Please get started. I might join a little late.

Sundar

On May 8, 4:30 pm, Dinesh Kantaria <dkanta...@gmail.com> wrote:

> Shashank,
>
> Are we suppose to use the same instructions from the last week for the call at 6?
>
> Thanks,
>
> Dinesh
> On May 7, 2011, at 5:19 PM, shashank saggar wrote:
>
>
>
>
>
>
>
> > How about tomorrow at 6?
>

[Dinesh Kantaria]

Thanks, Sundar.

Dinesh

[Shashank Saggar]

Thanks Sundar!

We can use the following web meeting, if the need be.

Shashank

[Shashank Saggar]

Meeting ID: 6309463

Password: 87654321

Toll-Free(US & Canada): 877-220-5439

On May 8, 2011, at 8:09 PM, Dinesh Kantaria wrote:

[Robert Binkley]

How did you come up with a strike price of 75? I don't understand how to find that number. Anyone?

-rob

d1 0.65947334
d2 -0.050667491

C 23.52004048

d1 = (LN(C5/C6)+(LN(1+C7)+(C8^2)/2)*C9)/(C8*SQRT(C9))

d2 = C11-C8*SQRT(C9)

C = =C5*NORMSDIST(C11)-PV(LN(1+C7)/12,6,0,-C6)*NORMSDIST(C12)

Sundar
The

> > > > >> > >>> >> I reserved room 300c for 11:00 - 1:00 in the event we

[pn]

Exhibit 1D - Pick a strike price which ties in with what you are proposing..

[Elliott Le]

Isn't the Black-Scholes formula used primarily for European options? According to p.307, we're dealing with American options. Maybe someone can clarify this.

Elliott Le

--
Elliott Le

[Erin Robinson]

Has anyone started drawing termianl payoff diagrams for this case?

 

Erin

[alex smirnov]

I just drew something similar to writing a call option, but shifted up by 10%.  So it starts as a straight line with a positive payoff and then slopes down and to the right when it hits $70.65 (90% of the current price)

no idea if that's right though

I ended up with a minimum interest rate of about 19%