--%>
Assignment Help - homework help

Convertible Bonds-Corporate Bonds

State the term Convertible Bonds in Corporate Bonds?

E

Expert

Verified

Convertible Bonds:

• Such are bonds which can be transformed into shares of common stock at certain predetermined ratio at the discretion of bondholder.

• The convertible feature permits the bondholders to share in good fortunes of the firm when the firm’s stock increases above some level.

• The conversion ratio is set and hence the firm’s stock price should appreciate 15 to 20 % before it is gainful to transform bonds into equity.

• To secure this benefit, bondholders would be willing to recompense a premium.

   Related Questions in Corporate Finance

  • Q : Explain usual value of the sales of net

    Does the usual value of the sales and of the net income of Spanish companies have anything to do along with sustainable growth?

    		•
  • Q : Relationship between the preferred

    Quetion: A private equity fund invests $100 million into a portfolio company and receives 100% of the preferred stock and 80% of the common stock of the company.  The preferred stock carries a face value of $1

    		•
  • Q : Long-Term Debt What are Long-Term Debt

    What are Long-Term Debt and what are their main parts.

    		•
  • Q : What is the sales of the firm The

    The financial ratios of a firm are as follows. Current ratio = 1.33 Acid-test ratio = 0.80 Current liabilities = 40,000 Inventory turnover ratio = 6  What is the sales of the firm?

    		•
  • Q : What did better mean specified by

    What did ‘better’ mean specified with Markowitz questioned regarding portfolio selection?

    		•
  • Q : What is the value of stock Brushy

    Brushy Mountain Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5% per year. I

    		•
  • Q : Shall we use the arithmetic mean or the

    The market risk premium is the difference between the historical return on the stock market and the return on bonds. But how many years does “historical” imply? Shall we use the arithmetic mean or the geometric one?

    		•
  • Q : Explain Indenture Explain the term

    Explain the term Indenture and also describe their provisions?

    		•
  • Q : Expected return for a portfolio What is

    What is the expected return for a portfolio consisting of 200 shares of Nike, 200 shares of Home Depot, and 400 shares of Intel if their expected returns are 10%, 8% and 12% respectively, and their current prices are $25, $50, and $25 per share respec

    		•
  • Q : Explain the branching structure of the

    Explain the branching structure of the binomial model.

    		•