Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Break Even Period:
It is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments. Assume that the dividend paid on equity we have seen above is Rs.0.75. That is, a current yield of 0.75/11 = 0.06818 or 6.82%. The bond, at 10%, will yield 10/117 = 0.08547 or 8.55%.
We note that holding the bond gives us a better return than the outright purchase of the common stock. Under these conditions, we try to calculate the number of years required to recover the conversion premium, which results due to different cash flows from the instruments. This period is referred to as the Break Even Period. It is calculated by the formula given below.
Break Even Period = Conversion premium/Interest Income
Break Even Period = = 2.8 years.
Till now we have been looking at a well-known model called the "Traditional Valuation Model".
In a more systematic manner,
Annual cash flow differential = Face amount x Coupon rate - Conversion value x Dividend yield
What is the operating leverage effect and what causes it? What are the potential benefits and negative consequences of high operating leverage? The phrase operating leverage e
Q. Explain Economic Order Quantity? Economic Order Quantity (EOQ):- Economic order quantity (EOQ) is that quantity of material for which each order must be placed. Purchasing l
Portfolios are simply combinations of different securities. The characteristics of investments do differ when we possess them in combinations or portfolios. As we shall see, an ass
Yellow: is the company which their stock performance was forecasted by analyst Blue: is the name of the company which made the recommendation by the analyst who work for it R
Equity Theor y This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute
Why do a Split? A 4 x 1 Split is an operation by which a shareholder now owns 4 shares for every share he/she had before. Logically, the stock market value of each of these new
Explain the structure of financial systems In direct finance borrower-spenders borrow funds straight from lenders in the financial markets by selling them securities. In indire
The price charged when one segment of an organization provides goods or services to another segment of the organization.
It is the most useful method of promoting economic development. It may be used for the development of economic and social overheads such as construction of roads, railways, power p
Illustrate the zero bonds security instruments. Zero coupon bonds are instruments under that a borrower promises, at the recent time, to pay one exact nominal sum (face value)
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd