Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Break Even Period:
It is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments. Assume that the dividend paid on equity we have seen above is Rs.0.75. That is, a current yield of 0.75/11 = 0.06818 or 6.82%. The bond, at 10%, will yield 10/117 = 0.08547 or 8.55%.
We note that holding the bond gives us a better return than the outright purchase of the common stock. Under these conditions, we try to calculate the number of years required to recover the conversion premium, which results due to different cash flows from the instruments. This period is referred to as the Break Even Period. It is calculated by the formula given below.
Break Even Period = Conversion premium/Interest Income
Break Even Period = = 2.8 years.
Till now we have been looking at a well-known model called the "Traditional Valuation Model".
In a more systematic manner,
Annual cash flow differential = Face amount x Coupon rate - Conversion value x Dividend yield
1) Is foreign exchange risk systematic? What are the implications of your answer regarding corporate hedging policy with respect to foreign exchange risk? In your answers make sure
Q. Show Factors influencing participation? Factors influencing participation: several research studies have shown that the intensity of participation depends on four factors.
Q. Traditional Approach of Financial Management? Traditional Approach: - Under this schema the role of financial management was limited to the procurement of funds on suitable
What is the relationship between a bond's market price and its promised yield to maturity? Explain. A bond's market price relies on its yield to maturity abbreviated as YTM. Wh
define ratio analysis. explain the advantages of ratio analysis
types of working managment policies
Electronic Communications Networks: In traditional stock exchanges, the buying and selling of stocks take place at a physical location only and the members have to conduct tradi
Explain learning outcomes of financial management By the end of this subject guide as well as having done the relevant readings and activities you should be able to
Your friend Peter is planning to set up a new business which will manufacture and sell wooden tables. The parts that make up the table consist of a wooden table top measuring 1m by
What are the options available for growth Joint venture A joint venture is when a separate company is formed, in which every member holds an equity st
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd