Convertible bond Flashcards
1
Q
Formula for Value of callable putable convertible bond
A
Value of callable putable convertible bond = Value of straight bond + Value of call option on the issuer’s stock – Value of issuer call option + Value of investor put option
2
Q
What is Minimal value of convertible bonds…
A
Max {Price of underlying or (CF x Stock price}
3
Q
Conversion value of bond
A
(Face value of bond x Market price of bond) / CF
4
Q
Premium over stright
A
Market price of convertible bond / Pirce of underlying
5
Q
Market conversion premium
A
Market converson price / Market price of stock
(MV convertible bond x CF) / Market price of stock
6
Q
Conversion price of convertible bond
A
par value divided by the conversion ratio
Face value / CF
