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

Leverages, Leverages 'Leverages' are of prime importance in the analysi...

Leverages 'Leverages' are of prime importance in the analysis of a companies' risk. They give a good picture of the business, financial and the overall risk of a company's oper

Define working capital, What is working capital? Working capital contains...

What is working capital? Working capital contains the current assets of the firm.

Bond with call and prepay options, Let us consider a bond with ...

Let us consider a bond with callable or prepayable feature. Figure shows the price/yield relationship of option-free bond and callable bond. The price yield

Show market risk in systematic risks, Market risk as that portion of total ...

Market risk as that portion of total variability of return caused by the alternating Forces of bull and bear markets. When the security index moves upward haltingly for a signifi

Explain how earnings available to common stockholders, Explain how earnings...

Explain how earnings available to common stockholders and common stock dividends paid from the current income statement affect the balance sheet item retained earnings. The cha

Healthcare finance, You are considering starting a walk-in-clinic. Your fin...

You are considering starting a walk-in-clinic. Your financial projections for the first year of operation are as follows: Revenues (10,000 visits) $400,000 Wages and benefits $220,

Leverage, EVALUATE THE IMPORTANCE OF LEVERAGE IN FINANCIAL MANAGEMENT OF SM...

EVALUATE THE IMPORTANCE OF LEVERAGE IN FINANCIAL MANAGEMENT OF SMALL SCALE COMPANY

Computation of the cost of capital, Q. Computation of the cost of capital? ...

Q. Computation of the cost of capital? Computation of overall cost of capital of the firm invoices Cost of debts: debt may be issued at par , at premium or discount it may

The time value of money , Calculate the present value and determine the npv...

Calculate the present value and determine the npv, Financial Management. Assume today is 3 December 2009. Helen is 30 years old and has a Bachelor of Business. She is currently em

Weighted average cost of capital, Weighted Average Cost of Capital Wei...

Weighted Average Cost of Capital Weighted average cost of capital is the average cost of the costs of several sources of financing. Weighted average cost of capital is also kn

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