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Renegades17

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Renegades17

Re: detearing post# 2329

Monday, 12/09/2013 8:55:48 AM

Monday, December 09, 2013 8:55:48 AM

Post# of 6681
I agree that's a good way to look at it...

It's basically a long-life call option on the company. You're paying a small premium now for that option, but as in all options, if the value doesn't exceed the strike price at expiration, it's worthless.

As you can probably tell, I have a finance "geek" side to me...in simpler terms, if the enterprise value (ie. value of all assets) is determined to be greater than the debt obligations, the equity gets recovery.
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