Mechanics of Convertible Bonds Presented by 2004. Introduction. Mechanics of Convertible Bonds - An Overview
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Mechanics of Convertible Bonds - An Overview
Rahul Bhattacharya will demystify the workings of convertible bonds and give you the toolkit to analyze a convertible bond in simple steps. This course will outline the basic mechanics of a convertible bond and its synthesis from equity; the need to issue convertible bonds from an issuer's point of view and the need to buy a convertible bond from an investor's point of view. The course will try to bring out the nuances of convertible bonds and their impact on equity markets, the different types of such bonds and the strategies that should be employed to trade them and invest in them. The course will cover the following points:
Rahul Bhattacharya is the CEO of Risk Latte Company Limited in Hong Kong and is currently involved in developing quantitative models in the areas of market risks and derivatives and structured products for hedge funds and financial institutions. Risk Latte Company Limited is a financial engineering and a risk & derivatives training and advisory firm and more information can be had from their website www.risklatte.com. Before starting Risk Latte, Rahul was a Senior Analyst with A M Best Company Limited, the New Jersey, USA based insurance rating agency. He was involved in risk modeling and risk analysis of insurance and re-insurance companies. He has more than 13 years work experience in the areas of proprietary trading of currency, equity and interest rate options, market risk modeling and market risk advisory, risk rating, corporate treasury management and computer programming. He has an MBA in Finance and a Master's Degree in Nuclear Physics from University of Delhi, Delhi, India.
What is a Convertible Bond Worth?
Types of Convertible Bonds
Companies: Why Issue a CB?
Stated Conv Price = (Par Value of the CB)/(Conv Ratio)
K = (CB’s Investment Value)/(Conversion Ratio)
PERCS = Long Stock + Short (OTM European) Call + Yield advantage
DECS = Long Stock + short (ATM European) Call + Long (OTM European) Call + Yield advantage
CB Investment Value
Trader / Investor
CB Call Option
LIBOR + Spread
No credit event