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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (76457)	2/23/2000 5:51:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

..not true, if issuing said security affects the market for same. Let's say you're Picasso (and not dead). A napkin sketch of yours is worth dinner to any restaurant -- but as you thus pay for more and more dinners, that may change. Perhaps next year, it'll take two sketches for a really good dinner, eh? Or one good sketch.. -g-, -mb

To: Don Lloyd who wrote (76457)	2/23/2000 10:20:00 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 132070

>>The opportunity cost of issuing a stock certificate is zero, because every option I previously had, I still have, including issuing an additional stock certificate, or making a secondary offering.<< i do not agree. choice 1: issue 10 stock options that get exercised for $10 each. choice 2: place a secondary for 10 stock shares at $10 each. what is the difference between scenario 1 and scenario 2? everything is the same except scenario 2 generates $100 to the company while secnario 1 doesn not, all else being equal. that is the opportunity cost. given the two choices, you lose $100 if you select choice 1. what you do after that is not relevant to determining the opportunity cost of these two choices. i buy a coke w/ my 50 cents. i lost the opportunity to buy a pepsi and a myriad of other 50 cent options. that was the opportunity cost of buying the coke. that doesn't mean since i can buy a pepsi later that there was no initial opportunity cost, right? you seem to argue that the company could still issue a secondary for $100 if choice 1 was selected (they could do it for choice 2, also - and if they did then choice 1 still cost $100!). yes, but they wouldn't need the secondary for $100 if the opportunity cost of choice 1 didn't cost them the $100 they need so badly! opportunity cost is calculated by taking two courses of action and figuring out what is different. the only financial difference between choice 1 and 2 is $100. ok, there may increased employee incentives that benefit the company and the xerox lease, but that this is a simple example.