Handbook of Corporate Equity Derivatives and Equity Capital Markets [Hardcover]

Equity strategies are closely guarded secrets and as such, there is very little written about how investors and corporate can utilise equity vehicles as part of their growth strategies. In this much-needed book, industry expert Juan Ramiraz guides readers through the whole range of equity derivative instruments, showing how they can be applied to a range of equity capital market situations, including hedging, yield enhancement and disposal of strategic stakes, mergers and acquisitions, stock options plan hedging, equity financings, share buybacks and other transactions on treasury shares, bank regulatory capital arbitrage and tax driven situations. The book includes case studies to highlight how equity derivative strategies have been used in real-life situations.Preface xvii

About the Author xix

1 Main Strategic Equity Derivative Instruments 1

1.1 Equity Forwards 1

1.1.1 Equity Forwards 1

1.1.2 Example of a Cash-settled Equity Forward on a Stock 2

1.1.3 Example of a Physically Settled Equity Forward on a Stock 3

1.1.4 Calculating the Forward Price of a Stock 4

1.2 Equity Swaps 6

1.2.1 Total Return Equity Swaps 6

1.2.2 Price Return Equity Swaps 7

1.2.3 Case Study: Physically Settled Total Return Equity Swap on Deutsche Telekom 7

1.2.4 Case Study: Cash-settled Total Return Equity Swap on Deutsche Telekom 12

1.2.5 Determination of the Initial Price 15

1.2.6 Determination of the Settlement Price 16

1.2.7 Equity Notional Resets 17

1.2.8 Case Study: Total Return Equity Swap on EuroStoxx 50 17

1.2.9 Compo Equity Swaps 21

1.2.10 Quanto Equity Swaps 23

1.2.11 Uses of Equitylƒm