Straight value (pure debt value), Financial Management

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. 

Posted Date: 9/8/2012 6:10:00 AM | Location : United States

Related Discussions:- Straight value (pure debt value), Assignment Help, Ask Question on Straight value (pure debt value), Get Answer, Expert's Help, Straight value (pure debt value) Discussions

Write discussion on Straight value (pure debt value)
Your posts are moderated
Related Questions
What risks are associated with direct foreign investment? How do these risks differ from those encountered in domestic investment?

Effect on Stock Valuation Until the 1960s, common stocks were viewed as a good instrument against loss caused by inflation. Also, before 1960, stocks were not providing full he


discuss the applicability ofan operating cycle in a poultry business(broilers)

Investors are always interested in estimating the price sensitivity of a bond to change in market interest rates. Let us study how prices change both in terms of

For what kinds of needs do you think a firm would issue securities in the money market versus the capital market?

Potential drawbacks of divestment - There may be some loss of economies of scale. Fixed overheads would have a lower capacity to recover them. - Cash generated may not be

The relative change in the yield for each treasury maturity is known as a shift in the yield curve. When the change in the yield for all the maturities is same, t

Determine the Objectives of the Firm Objectives of the Firm - Profit Maximisation and Wealth Maximisation To put it simply, we may say that goal of any business is to max

A financial consultant obtains different valuations of my company when it discounts the Free Cash Flow (FCF) as opposed to when it uses the Equity Cash Flow. Is this correct? N