Geared Equity Investment (GEI) contracts are an over-the-counter financial derivative product offered by Macquarie Bank, Ltd, to individual investors in Australia and New Zealand as a managed-risk investment in local shares carrying significant tax shield benefits. Upon issuance, a geared equity...

Purpose – The purpose of this paper is to estimate the cost of granting executive stocks with strike prices adjusted by the cost of capital. Design/methodology/approach – In the paper a Monte Carlo simulation approach developed in Longstaff and Schwartz is used in conjunction with the...

Executive stock options with a time-varying strike price are a recent innovation in Australia and New Zealand, and possibly other parts of the world. These options have a strike price that increases at a prespecified rate and also have a dividend protection feature that reduces the strike price...