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Code: 47899 Visited: 374 Publish Date: Mar 04 2018 - 1:57
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Capital Market
Issuance of Standards Parallel Salam Worth $9 Million
Tehran, March. 04 (SENA) - Today, March 4, standards parallel Salam contracts on electricity worth 400 billion rials ($9 billion) with one-year maturity are issued in Iran Energy Exchange to provide financing for Arian Mahtab Co., according to the CEO of Tamadon Investment Bank.

Tehran, March. 04 (SENA) - Today, March 4, standards parallel Salam contracts on electricity worth 400 billion rials ($9 billion) with one-year maturity are issued in Iran Energy Exchange to provide financing for Arian Mahtab Co., according to the CEO of Tamadon Investment Bank.

In an interview with SENA, Mahmoodreza Khejenasiri explained that the exercise price of the issuer’s call options and investors’ put options, as well as the guaranteed purchase price of the market maker in the secondary market, are calculated according to the base price of the underlying asset. “The strike price for call options and put options at the maturity is worked out by adding 18 and 17.5 percent respectively to the base price of the underlying asset in the initial public offering. The market maker also guarantees to purchase the securities in the secondary market until maturity at a daily compounded rate of 17 percent plus the base price”, he added.

If the price of the underlying asset at the maturity is higher than the base price multiplied by 1.18, the issuer would exercise their options and buy the securities back from investors 18 percent higher than the base price i.e. the rate of return will be 18 percent. However, if the price of the underlying asset at the maturity is no more than 17.5 percent higher the base price the investors can exercise their put options and sell the securities back to the issuer at base price multiplied by 1.175, i.e. the rate of return is 17.5 percent.

The standard parallel Salam securities have no periodic coupons, and investors, at the end of one-year maturity, shall use between physical delivery or cash settlement with reference to the mentioned options. The liquidity of the securities is also guaranteed daily by the floor price offered by a market maker.

 

 

 

 
By: Security and Exchange News Agency (SENA)
 
 
 
 
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