Comments on: How Carlos Slim made $150 million from the NYT A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: AnonymousChef Mon, 04 Oct 2010 14:06:50 +0000 Jay,

I agree it was a little bit in finance-ese. Here you go:

The “coupon” is the interest rate.

An stock warrant is a contract where you can force the company to sell you stock at a specified price. That price is the “strike price.”

So Slim loaned the Times $250M at a 14% interest rate. He made $105M in interest. In addition, the Times had to pay a 5% prepayment penalty of $12.5M. Finally, Slim gets stock warrants worth $35 million. This is a lower limit of how much money Slim made, because part of the interest could have been paid in bonds – if that happened, the Times would now have had to pay a prepayment penalty on it, too.

Those warrants are valuable because he can buy them for $1.50 cheaper than the current public share price, and because the volatility of the Times’ stock (if the Times’ share prices jump around a lot, they’re more valuable, because there is no limit on how high they can go, but they can’t go lower than zero.)

By: jayrosen Mon, 04 Oct 2010 13:05:10 +0000 Felix: I wish I understood a word of this. Just a note to say that the entire post assumes a level of knowledge that may not be there in interested readers. I have a PhD but I don’t know what a coupon is, in this context, or a strike price. How about a version of the post for non-specialists? Or maybe a glossary? Or an explainer, Planet Money style?

Jay Rosen

By: MarkWolfinger Sun, 03 Oct 2010 20:27:18 +0000 Felix,

Current NYT implied volatility is just over 50.

The historical volatility for the stock – over the past few months is 57.