Minimum value, Financial Management

The minimum value is the lower limit for the market value of a convertible bond. It is equal to the greater of the conversion value and the straight value. We can represent it as:

         Minimum value = Maximum (Conversion value, Straight value)

If the conversion price is considerably below the current market price of the equity share, the market price of the convertible bond will reflect the conversion value and will sell at a premium over the conversion value. In another situation, if the present market price of the equity share is lower than the conversion price, conversion of the bonds into equity shares may not at all happen and as a result the convertible bond will sell at or just higher than the straight value.

Posted Date: 9/8/2012 6:15:23 AM | Location : United States







Related Discussions:- Minimum value, Assignment Help, Ask Question on Minimum value, Get Answer, Expert's Help, Minimum value Discussions

Write discussion on Minimum value
Your posts are moderated
Related Questions
Accounting Framework - Convention of Conservation Conservatism refers to the principle and practices that are established through way of tradition, reluctance to change from e

Q. Describes the Certainty Equivalent Coefficient Method? Introduction: - Certainty equivalent coefficient process which makes adjustment against risk in the estimates of futur

What is the essential condition for a fixed-for-floating interest rate swap to be possible? For a fixed-for-floating interest rate swap to be feasible it is essential for a quali


Q. Graphic Presentation of Organisation of Finance Function? Graphic Presentation of Organisation of Finance Function: - The following chart describes the organization of the f

Given below are the cash flows of a project. Find out the net present value of the project. Cost of capital is 18% and initial investment is Rs. 2,00,000. Year Cash Flows (lakhs)

Analyze a Startup How would you select an organizational form for a business? Think about this question as you read the following scenario. Joe Jones has created a business

Question: (a) Describe the Interest Rate Parity Theory. (b) A company needs to pay in 3 months USD 1 million. The USD are already at disposal in the company, thus the c

Determine the method of Credit Rating It is obligatory for the issuing companies to get credit rating done on debt securities issues. Credit ratings are also required for Comme

Inflation and Exchange Rates To understand the impact of inflation, several terms should be understood. For example, inflation from the investors' standpoint must be clearly de