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

Determine the formula to solve payment needed for a car loan, Which formula...

Which formula would you use to solve for the payment needed for a car loan if you know the interest rate, length of the loan, and the borrowed amount?  Describe. To solve for k

Indexed bonds, In indexed bonds, the principal and coupon payme...

In indexed bonds, the principal and coupon payments are linked to the market index like inflation and price index. Index bonds are attractive to investors

Explain inventory approach to cash management, Q. Explain Inventory approac...

Q. Explain Inventory approach to cash management? This method analysis cash in the same way as engine inventory such that EOQ models may be employed. In such conditions cash

Time value of money, TIME VALUE OF MONEY Time value of money can be de...

TIME VALUE OF MONEY Time value of money can be described as the value of a unit of money at different time periods.  It involves that the value of a unit of money is not same

Find out weighted average cost of capital, The Beta Corporation has an opti...

The Beta Corporation has an optimal debt ratio of 40%. Its cost of equity capital is 12% and its before-tax borrowing rate is 8%.  Given a marginal tax rate of 35%, calculate (

Define the cash budget, Q. Define the Cash Budget? Cash Budget: - A cas...

Q. Define the Cash Budget? Cash Budget: - A cash budget is an estimation of cash receipts and cash payments for a future period of time. It is prepared to predict the cash requ

Paper on Estate Planning (3–5 pages), Evaluate the tools commonly used in e...

Evaluate the tools commonly used in estate planning, including trusts, life insurance, and annuities. Compare the tools as to how they would apply for a couple in their mid-50s who

Explain concept of returns, Meaning of Returns The return from holding a...

Meaning of Returns The return from holding an investment over some period - say, a year, is simply any cash payments received due to ownership, plus the change in market price,

Cost of capital, Q. Cost of capital? The terms of cost of capital refer...

Q. Cost of capital? The terms of cost of capital refers to the minimum rate of the return a firm must earn on its investment so that the market value of the company equity shar

Identification the management risk, Identification the management risk: ...

Identification the management risk: The first and most essential aspect of risk management is recognising what events may occur within a business.  It is only when all the poss

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