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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.
Q. Advantage of Profitability Index method? Advantage of PI method:- (i) Similar to the other DCF techniques the PI method as well takes into account the time value of money
In the Index Amortizing note, the principal is repaid according to an amortization schedule linked to a specific reference rate. It is structured in such a manner
The amount by which the market price exceeds the conversion value or the investment value is called as the premium.
Following are the areas an analyst should consider while assessing the creditworthiness of an issuer. 1. Security Limitations: The bond indenture shoul
lso from the auditor's report, they have reported that the company has used funds raised on short-term basis for long-term investment. The company has purchased certain fixed asses
What are the financial management problems Traditional approach was challenged was that the treatment was built too closely around episodic events, like incorporation, promotio
Repurchase agreement is a contract wherein the seller of a security agrees to buy back the same security from the purchaser at a specified price and time. It is also
calculate
Explain the basic differences between the operation of a currency forward market and a futures market. Answer: The forward market is an OTC market in which the forward contract
help me withh the calculation concept of the point where the firm is indifferent
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