In relation to a convertible arbitrage trade in general, carefully explain the impact of a potential takeover/acquisition of the company that issued the convertible bond on the convertible arbitrage trade. Also, compare and contrast the effectiveness of a change of control put (at par) versus a ratchet table.

Describe how convertible securities are incorporated in the calculation of EPS.

How is the potentially dilutive effect of convertible preferred stock reflected in EPS calculations by the if-converted method? How is this different from the way convertible bonds are considered?

Describe the accounting treatment for convertible debt and for debt issued with detachable stock warrants. How does the treatment differ and what justification does FASB use for requiring different treatment?.

e) describe the expiration and exercise procedures commonly used in derivatives exchanges.  f) describe over-the-counter (OTC) derivatives trading and the risks involved in OTC trading versus exchange trading.    g) discuss the role of the clearinghouse in derivatives trading.  h) explain the concepts of initial margin, maintenance margin, and margin call.