Home     About Us    Contact Us     Contribute     Privacy
Mutual Funds
Related Articles
Related Definitions
Related Categories
Tip of the Day

Tip of the Day Be Wary of Mutual Funds

Be Wary of Mutual Funds - Mutual funds for years have been a safe investment option if you are going to invest your money, but lately these investments are not...

read entire tip

Recently Added
Other Great Sites

Pricing Convertible Bonds

A convertible bond's price is written in the company's prospectus when the bond is issued. Convertible bonds are issued by a company in order to raise capital; they are securities that have some of the characteristics of both bonds and stocks. The bonds pay interest to bond holders, but also have a provision that allows a bond holder to convert the bonds into a predetermined number of shares of public common stock of the issuing company. Because a convertible bond provides the right to convert shares into common stock, and thus share in the capital appreciation of the stock, the bonds carry a lower coupon or interest rate. Convertible bonds are complex and have a unique set of terms that must be understood before the investor buys them.

The actual conversion price is the price of the company's stock at which the bond holder can exercise his right to convert his bond into stock. The conversion price is set higher than the stock price at the time that the convertible bonds are issued, so it is not until the stock price goes up to the price agreed on that the bond holder can exchange his bonds for stock.

In addition to the conversion price, a company's bond agreement also lists the conversion ratio, which is the number of stocks that one bond may be exchanged for or converted into. The conversion value is what the stocks are worth at the time that the bond can be exchanged for them. In other words, a convertible bond's value can be calculated by multiplying the current price of the stocks by the number of shares that the bond can be converted to. As the price of the company's stock goes up, the convertible bond's value increases.

Some convertible bonds are callable, which means that the issuing company can call the bonds before the bond's maturity. This is usually done to encourage the bond holders to convert their bonds at a lower price if the company expects their stock prices to increase greatly.

An advantage of convertible bonds is that in the event of the issuing company going bankrupt, holders of convertible bonds will have their claims paid before general stockholders.

Discuss It!

Huawei in Canada: Can It Become a Trusted Player Case Solution said:

They are not able to finish the writing assignments on time. For some students, writing any writing assignments is able to waste their time

Term Paper Writing Services said:

This is really great work. Thank you for sharing such a useful information here in the blog.

Number Theory Essay Writing Service said:

Really i appreciate the effort you made to share the knowledge. This is really a great stuff for sharing. Keep it up . Thanks for sharing.

192.168.l.l said:

Thanks, I was looking for this information, I am glad that I found your site||| said:

writing any writing assignments is able to waste their time

Company shirts said:

I just overwhelmed when i learn the responsibility every citizen of their country or state.Work more strategically and work less hours by ensuring your time is respected and share the lessons which is passing through in your mind.

prayer times said:

Good tips! Thanks. I was looking for such information.

net-worths.org said:

You have made a magnificent appearing. I will tunnel it and after a short time recommend to my mates.

juke car covers said:

I touch really precise version these articles I stingy there are writers that can create moral stuff.

car tinting perth said:

As of late predicted that would show to you that you have individuals like me who welcome your work.

free walking tour stockholm said:

Might want to compliment the author for composing this perfect article.

Game Service said:

Even the words like appealing and captivating can't do full equity with regards to portraying this blog.

get a loan said:

Indeed, even the words like engaging and dazzling can't do full value concerning depicting this blog.

free instagram followers | likes for instagram said:

Article showcasing is not advanced science. It's a standard advertising system that has been around online in light of the fact that. the web began.

ford fairlane car cover said:

This is something that you recently read but can't get enough of reading this.

http://myvigour.com/things-need-know-taking-mt2/ said:

A finish pointed blog, expected to awe individuals.

FUT 18 Coins said:

How to buy FUT 18 Coins cheap and easy online? Get free tips here. FUT 18 Coins http://fut18coinsinfo.angelfire.com/

brian holm lawyer san diego said:

Felt great to know internet has still amazing blogs like this.

cheap writing said:

A blog that mushroomed from visual edification.

best router said:

Very Interesting and wonderfull information keep sharing

Most Popular Articles
Most Popular Definitions
Daily Definition

Definition of the Day Heterogeneous

Heterogeneous – Heterogeneous is a broad term that refers to individuals, items, companies, industries, etc. that are dissimilar from each other while still pertaining to a larger whole.  The opposite of heterogeneous is homogeneous, which encompasses similar objects within a group.  Outside of economics and business, heterogeneous can also be...

read entire definition




Home     About Us    Contact Us     Contribute     Sitemap


Copyright © 2009 TeenAnalyst.com