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

International mortgage backed securities, International mortgage-back...

International mortgage-backed securities are the mortgage-backed securities that are issued in a country by a non-domestic entity. With limited size of the Indian

State about the pest analysis, PEST analysis Political for instance...

PEST analysis Political for instance political culture, bureaucracy of regulating competition Economic for instance exchange rates, interest rates, taxation or busines

Show factors influencing participation, Q. Show Factors influencing partici...

Q. Show Factors influencing participation? Factors influencing participation: several research studies have shown that the intensity of participation depends on four factors.

Estimating working capital requirements, ESTIMATING WORKING CAPITAL REQUIRE...

ESTIMATING WORKING CAPITAL REQUIREMENTS To facilitate, estimate the extent of working capital requirement of a firm, various factors are to be considered. There are various me

Sales managers view on exchange risk, The sales manager considers that ther...

The sales manager considers that there will be substantial foreign exchange risk in trading with Werland. Payment is unpaid in Werland francs in three months time. The current ster

Describe the internal control procedures, Board should encourage a strong c...

Board should encourage a strong control culture. Manager's bonus must not only be linked to company profits but also linked to internal control procedures being adhered to. There m

Time value of money, Ask quSteve and Ed are cousins who were both born on t...

Ask quSteve and Ed are cousins who were both born on the same day, and both turned 25 today. Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th

Future value of an annuity, Will you please give the defination of "Future ...

Will you please give the defination of "Future Value Of An Annuity"?

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