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When a company is acquired, its stock typically stops trading on the stock exchange and shareholders receive compensation, which can be in the form of cash, stock in the acquiring company, or a combination of both.

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7mo ago

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What happens to put options when a company goes bankrupt?

What happens is the put writer gets hosed. If a company goes into Chapter 7 bankruptcy, all its stock becomes worthless. Unfortunately for the people who wrote put options on the company's stock, those do NOT become worthless. If the put buyer decides to exercise the option - and he will - the writer has to buy all those shares of worthless stock at the strike price.


What happens to stock when a company gets bought?

When a company gets bought, its stock typically experiences a significant change in value, often reflecting the acquisition price offered by the buyer. If the acquisition price is above the current market value, the stock usually rises to approach that price, as investors anticipate the deal will go through. Conversely, if there are concerns about the deal's approval or terms, the stock may not rise as expected or could even drop. Ultimately, once the acquisition is completed, the stock may be delisted or converted into shares of the acquiring company, depending on the terms of the deal.


Why a comapany issues shares?

Company's usually issue stocks to generate capital for their business and expansion plans. When a company goes public it sells its shares to the public and gets money in return. This way they raise capital. After a stock gets listed in a notified stock exchange people trade the stock in the markets and the price of the stock may go up or down based on the way the company's business is developing


What happens when you invest in a mutual fund?

your money gets loaned out to businesses and companies.


What happens to the money put into an open mutual fund?

It gets invested in the stock market or in any investment class that the mutual fund is supposed to invest in. Ex: Debt Mutual funds invest in Debt instruments like bonds and Equity Diversified funds invest in Equity Shares etc

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What happens to the stock of a publicly traded company in chapter 11 if it is bought out by another company?

It can be two ways. If the other company is a publicly traded company, the shares of the acquired company would get merged with the acquiring company's shares. All shareholders of the acquired company would be issued new shares of the acquiring company at a ratio that would be defined during the acquisition. If the other company is not a publicly traded company, they may opt to retain the stocks in the market of buy them all from the investors at a predefined price that gets fixed during the acquisition.


What happens to put options when a company goes bankrupt?

What happens is the put writer gets hosed. If a company goes into Chapter 7 bankruptcy, all its stock becomes worthless. Unfortunately for the people who wrote put options on the company's stock, those do NOT become worthless. If the put buyer decides to exercise the option - and he will - the writer has to buy all those shares of worthless stock at the strike price.


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