Define a convertible bond, Financial Management

Assignment Help:

Define a Convertible Bond

A convertible bond issue permits the investor to exchange the bond for a pre-defined number of equity shares of the issuer.  The convertible bond’s floor value is its straight fixed-rate bond value.  Convertibles generally sell at a premium above the larger of their straight debt value and their conversion value.  In addition, investors are generally willing to accept a lower coupon rate of interest as compared to the comparable straight fixed coupon bond rate because they find out the call feature attractive.  Bonds along with equity warrants can be viewed like a straight fixed-rate bond along with the addition of a call option (or warrant) feature.  The warrant allows the bondholder to purchase a fixed number of equity shares in the issuer at a pre-stated price over a pre-determined period of time.


Related Discussions:- Define a convertible bond

Explain about cash flow statement, Q. Explain about Cash Flow Statement? ...

Q. Explain about Cash Flow Statement? Cash Flow Statement: - This is another process of cash management. A cash flow statement is the statement showing inflows as well as outfl

Financial ratio analysis, 1. Calculate the compound average annual growth r...

1. Calculate the compound average annual growth rate in sales and profit after tax

Accounting framework - convention of disclosure, Accounting Framework - Con...

Accounting Framework - Convention of Disclosure The doctrine of disclosure suggested in which all accounting statements should be honest and to that end, full disclosure of al

Determine the operating profit of the firm, 1. The Gulf had sales of  AED 2...

1. The Gulf had sales of  AED 20,000,000 and cost of goods sold of  AED 10,250,000. Selling and administrative expenses represented 8 percent of sales. Depreciation was 5 percent o

Documenting the accounting system, Documenting the accounting system Th...

Documenting the accounting system There are 3 methods generally used to document the clients system. Narrative notes: Written description of the system Advantages:- C

Calculation of before-tax return on capital, Calculation of before-tax retu...

Calculation of before-tax return on capital employed Total net before-tax cash flow = 122 + 143 + 187 + 78 = $530000 Total depreciation = 250000 - 5000 = $245000 Average

Benefits of mentoring for new members of staff, JB has recently joined the ...

JB has recently joined the Finance Department of P Company as a trainee management accountant. As part of the Company's induction, she has been offered a mentor. Though, since JB h

Modern approach at financial problems, Modern approach at financial problem...

Modern approach at financial problems With the advent of technology and need to tighten shipsdue to competition, financial management became as much a science as art. Efficient

Define where security returns are found less correlated, Security returns a...

Security returns are found to be less correlated across countries than within a country. Why can this be? Answer:  Security returns are less correlated possibly because countries

What do you mean by business risk, Q. What do you mean by Business Risk? ...

Q. What do you mean by Business Risk? Business risk is that portion of the unsystematic risk caused by the operating environment of the business. Business risk arises from the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd