Wednesday, May 27, 2009

Citigroup stock price anomaly

Given that Abu Dhabi owns a great deal of Citigroup, this post may be of interest to followers of the UAE economy:
When the markets closed last Friday, the cost of buying 1,000 shares of Citigroup in these three ways were (using price quotes from Yahoo and ignoring transaction costs):
Method Cost

Simple $3,670

Preferred $3,052

Synthetic $3,160
Note: The preferred calculation is based on the Series F; other preferreds give slightly different values. The synthetic is based on options that mature in September 2009 with a strike price of $4.

What’s going on here? Why does it appear that investors in the common stock are overpaying by as much as 20%?


Blogger sarah said...

Thanks for this site.Chilton is a good-guy economist' - Newmark's Door. 'I can see you won't be the Ralph Nader of the Emirates'.

11:40 PM  
Blogger changee said...

Nice article, thanks for the safari

12:22 PM  

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