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The straight value of a convertible bond is nothing but the value of a non-convertible bond having same characteristics. For example, assume that a company has two types of bond issues outstanding in the market having a same coupon rate: a convertible bond issue and a non-convertible bond issue. The market price of the convertible and non-convertible bonds is Rs.190 and Rs.150 respectively. Thus, the straight value of the convertible bond is Rs.150. Investors are willing to pay a premium of Rs.40 - the privilege of being able to convert the bond into common shares.
Explain the following term: Perpetual bonds, Floating rate bonds, Index-linked bonds and Callable bonds. Perpetual bonds (also termed as consols) are never mature. This
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The amount by which the market price exceeds the conversion value or the investment value called the premium. When expressed as a percentage, it is given by,
For what kinds of needs do you think a firm would issue securities in the money market versus the capital market?
What are the Corporate Bonds? Corporate bonds are issued by huge corporations while they require long-term financing. They generally make interest payments double a year (sem
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