1513:. For countries, such as the UK, where companies are subject to limits on the number of shares that can be offered to non-shareholders non-pre-emptively, convertibles can raise more money than via equity issues. Under the UK's 1989 Guidelines issued by the Investor Protection Committees (IPCs) of the Association of British Insurers (ABI) and the National Association of Pension Fund Managers (NAPF), the IPCs will advise their members not to object to non pre-emptive issues which add no more than 5pct to historic non-diluted balance sheet equity in the period from AGM to AGM, and no more than 7.5pct in total over a period of 3 financial years. The pre-emption limits are calculated on the assumption of 100pct probability of conversion, using the figure of undiluted historic balance sheet share capital (where there is assumed a 0pct probability of conversion). There is no attempt to assign probabilities of conversion in both circumstances, which would result in bigger convertible issues being permitted. The reason for this inconsistency may lie in the fact that the Pre Emption Guidelines were drawn up in 1989, and binomial evaluations were not commonplace amongst professional investors until 1991–92.
1216:
higher the volatility, the flatter is the bell-shape. Where there are issuer calls and investor puts, these will affect the expected residual period of optionality, at different share price levels. The binomial value is a weighted expected value, (1) taking readings from all the different nodes of a lattice expanding out from current prices and (2) taking account of varying periods of expected residual optionality at different share price levels. The three biggest areas of subjectivity are (1) the rate of volatility used, for volatility is not constant, and (2) whether or not to incorporate into the model a cost of stock borrow, for hedge funds and market-makers. The third important factor is (3) the dividend status of the equity delivered, if the bond is called, as the issuer may time the calling of the bond to minimise the dividend cost to the issuer.
1540:. Convertibles have a place as the currency used in takeovers. The bidder can offer a higher income on a convertible than the dividend yield on a bid victim's shares, without having to raise the dividend yield on all the bidder's shares. This eases the process for a bidder with low-yield shares acquiring a company with higher-yielding shares. Perversely, the lower the yield on the bidder's shares, the easier it is for the bidder to create a higher conversion premium on the convertible, with consequent benefits for the mathematics of the takeover. In the 1980s, UK domestic convertibles accounted for about 80pct of the European convertibles market, and over 80pct of these were issued either as takeover currency or as funding for takeovers. They had several cosmetic attractions.
1031:: The non-dilutive feature has been popularised with the lower interest rates (e.g. in Euro) in order to make convertible issuance still attractive for issuers already benefitting from low interest charges in the straight bond market. In a non-dilutive placement, the issuer would simultaneously enter in an OTC option agreement with the underwriter (or a third party). This option would often match the strike of the convertible as well as its maturity. This would result in cancelling out the dilution in case of a conversion of the convertible at maturity if the stock price is above the strike. Typically, in order to fully prevent dilution the convertible prospectus would constraint possibility of early conversion.
997:: The ability of the issuer (on some bonds) to call a bond early for redemption. This should not be mistaken for a call option. A Softcall would refer to a call feature where the issuer can only call under certain circumstances, typically based on the underlying stock price performance (e.g. current stock price is above 130% of the conversion price for 20 days out of 30 days). A Hardcall feature would not need any specific conditions beyond a date: that case the issuer would be able to recall a portion or the totally of the issuance at the Call price (typically par) after a specific date.
1060:: European, Middle Eastern and African issuances are trading usually out of Europe, London being the biggest node followed by Paris and to a lesser extent Frankfurt and Geneva. It represents about 25% of the global market and shows a greater diversity in terms of structures (e.g. from CoCoCo's to French OCEANE). Because of that lack of standardisation, it is often considered to be more technical and unforgiving than the American market from a trading perspective. A very tiny amount of the volumes is traded on exchange while the vast majority is done
47:
1584:. The market for convertibles is primarily pitched towards the non taxpaying investor. The price will substantially reflect (1) the value of the underlying shares, (2) the discounted gross income advantage of the convertible over the underlying shares, plus (3) some figure for the embedded optionality of the bond. The tax advantage is greatest with mandatory convertibles. Effectively a high tax-paying shareholder can benefit from the company securitising gross future income on the convertible, income which it can offset against taxable profits.
1009:(aka CoCo): Restrict the ability of the convertible bondholders to convert into equities. Typically, restrictions would be based on the underlying stock price and/or time (e.g. convertible every quarter if stock price is above 115% of the conversion price). Reverse convertibles in that respect could be seen as a variation of a Mandatory bearing a contingent conversion feature based. More recently some CoCo's issuances have been based on Tier-1 capital ratio for some large bank issuers.
861:
Most reverse convertibles are synthetics. Synthetics are more similar to structured products with settlement done in cash and no equities being produced as the result of a conversion. The
Packaged Convertibles (e.g. Siemens 17 DE000A1G0WA1) are sometimes confused with synthetics due to the fact an issuer (sometime a portfolio manager) will create a structure using straight bonds and options. There are in reality two completely different products with different risks and payoffs.
793:" option strategy. The first conversion price would limit the price where the investor would receive the equivalent of its par value back in shares, the second would delimit where the investor will earn more than par. If the stock price is below the first conversion price the investor would suffer a capital loss compared to its original investment (excluding the potential coupon payments). Mandatory convertibles can be compared to forward selling of equity at a premium.
953:: the difference between the market conversion price and the current market price of the underlying stock. Convertible bond buyers accept a conversion premium in exchange for the downside protection provided by a convertible bond's fixed income characteristics. As the stock price declines, the price of the convertible bond will not drop below its bond floor value. Usually expressed as on a per-share basis, the market conversion premium is calculated as follows:
1082:
referred to as being "on swap". Hedged investors would modulate their different risks (e.g. Equity, Credit, Interest-Rate, Volatility, Currency) by putting in place one or more hedge (e.g. Short Stock, CDS, Asset Swap, Option, Future). Inherently, market-makers are hedged investors as they would have a trading book during the day and/or overnight held in a hedged fashion to provide the necessary liquidity to pursue their market making operations.
920:: The price that the convertible investor effectively pays for the right to convert to common stock. It is calculated as shown below. Once the actual market price of the underlying stock exceeds the market conversion price embedded in the convertible, any further rise in the stock price will drive up the convertible security's price by at least the same percentage. Thus, the market conversion price can be thought of as a "break-even point."
780:
maturity date where the nominal value of the bond is redeemable by the holder. This type is the most common convertible type and is typically providing the asymmetric returns profile and positive convexity often wrongly associated to the entire asset class: at maturity the holder would indeed either convert into shares or request the redemption at par depending on whether or not the stock price is above the conversion price.
1456:. For a finance director watching the trend in interest rates, there is an attraction in trying to catch the lowest point in the cycle to fund with fixed rate debt, or swap variable rate bank borrowings for fixed rate convertible borrowing. Even if the fixed market turns, it may still be possible for a company to borrow via a convertible carrying a lower coupon than ever would have been possible with straight debt funding.
1025:): Conversion price would be readjusted in case of a take-over on the underlying company. There are many subtype of ratchet formula (e.g. Make-whole base, time dependent...), their impact for the bondholder could be small (e.g. ClubMed, 2013) to significant (e.g. Aegis, 2012). Often, this clause would grant as well the ability for the convertible bondholders to "put" i.e. ask for the early repayment of their bonds.
563:
3250:
3240:
1469:. Similarly, the conversion price a company fixes on a convertible can be higher than the level that the share price ever reached recently. Compare the equity dilution on a convertible issued on, say, a 20 or 30pct premium to the higher equity dilution on a rights issue, when the new shares are offered on, say, a 15 to 20pct discount to the prevailing share price.
1482:. With a convertible bond, dilution of the voting rights of existing shareholders only happens on eventual conversion of the bond. However convertible preference shares typically carry voting rights when preference dividends are in arrears. Of course, the bigger voting impact occurs if the issuer decides to issue an exchangeable rather than a convertible.
1527:
maturity date, the issuer will have benefited by having issued the bonds on a low or even zero-coupon. The higher the premium redemption price, (1) the more the shares have to travel for conversion to take place before the maturity date, and (2) the lower the conversion premium has to be at issue to ensure that the conversion rights are credible.
1073:
issuers. One key specificity of the
Japanese market is the offering price of issuance being generally above 100, meaning the investor would effectively bear a negative yield to benefit from the potential equity underlying upside. Most of the trading is done out of Tokyo (and Hong-Kong for some international firms).
1188:. However, this method ignores certain market realities including stochastic interest rates and credit spreads, and does not take into account popular convertible features such as issuer calls, investor puts, and conversion rate resets. The most popular models for valuing convertibles with these features are
762:, as a form of debt that converts to equity in a future investing round. It is a hybrid investment vehicle, which carries the (limited) protection of debt at the start, but shares in the upside as equity if the startup is successful, while avoiding the necessity of valuing the company at too early a stage.
1545:
The pro-forma fully diluted earnings per share shows none of the extra cost of servicing the convertible up to the conversion day irrespective of whether the coupon was 10pct or 15pct. The fully diluted earnings per share is also calculated on a smaller number of shares than if equity was used as the
1085:
Long-only/Outright
Investors: Convertible investors who will own the bond for their asymmetric payoff profiles. They would typically be exposed to the various risk. Global convertible funds would typically hedged their currency risk as well as interest rate risk in some occasions, however Volatility,
788:
Mandatory convertibles are a common variation of the vanilla subtype, especially on the US market. Mandatory convertible would force the holder to convert into shares at maturity—hence the term "Mandatory". Those securities would very often bear two conversion prices, making their profiles similar to
1040:
The global convertible bond market is relatively small, with about 400 bn USD (as of Jan 2013, excluding synthetics). As a comparison, the straight corporate bond market would be about 14,000 bn USD. Among those 400 bn, about 320 bn USD are "Vanilla" convertible bonds, the largest sub-segment of the
860:
convertible bond issued by an investment bank to replicate a convertible payoff on a specific underlying equity. Sometimes referred also as Cash settled Bank
Exchangeable Bonds (e.g. Barclays/MSFT 25 US06738G8A15 - Barclays Bank PLC is the issuer while Microsoft is the referenced underlying equity).
1215:
and from home-developed models, amongst others. These models needed an input of credit spread, volatility for pricing (historic volatility often used), and the risk-free rate of return. The binomial calculation assumes there is a bell-shaped probability distribution to future share prices, and the
1081:
Hedged/Arbitrage/Swap investors: Proprietary trading desk or hedged-funds using as core strategy
Convertible Arbitrage which consists in, for its most basic iteration, as being long the convertible bonds while being short the underlying stock. Buying the convertible while selling the stock is often
723:
rate lower than that of similar, non-convertible debt. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments and the return of principal upon maturity. These properties—and the fact that convertible bonds trade often
1570:
The cosmetic benefits in (1) reported pro-forma diluted earnings per share, (2) debt gearing (for a while) and (3) pro-forma consolidated pre-tax profits (for convertible preference shares) led to UK convertible preference shares being the largest
European class of convertibles in the early 1980s,
1241:
or common shares for the investor. They provide asset protection, because the value of the convertible bond will only fall to the value of the bond floor: however in reality if stock price falls too much the credit spread will increase and the price of the bond will go below the bond floor. At the
1048:
North
America: About 50% of the global convertible market, mostly from the USA (even if Canada is well represented in the Material sector). This market is more standardised than the others with convertible structures being relatively uniform (e.g. Standard Make-Whole take over features, Contingent
848:
Exchangeable bond where the issuing company and the underlying stock company are different companies (e.g. XS0882243453, GBL into GDF Suez). This distinction is usually made in terms of risk i.e. equity and credit risk being correlated: in some cases the entities would be legally distinct, but not
810:
Packaged convertibles or sometimes "bond + option" structures are simply a straight bond and a call option/warrant wrapped together. Usually the investor would be able to then trade both legs separately. Although the initial payoff is similar to a plain vanilla one, the
Packaged Convertibles would
1224:
Convertible bonds are mainly issued by start-up or small companies. The chance of default or large movement in either direction is much higher than well-established firms. Investors should have a keen awareness of significant credit risk and price swing behavior associated with convertible bonds.
779:
Vanilla convertible bonds are the most plain convertible structures. They grant the holder the right to convert into a certain number of shares determined according to a conversion price determined in advance. They may offer coupon regular payments during the life of the security and have a fixed
1551:
In some countries (such as
Finland) convertibles of various structures may be treated as equity by the local accounting profession. In such circumstances, the accounting treatment may result in less pro-forma debt than if straight debt was used as takeover currency or to fund an acquisition. The
801:
Reverse convertibles are a less common variation, mostly issued synthetically. They would be opposite of the vanilla structure: the conversion price would act as a knock-in short put option: as the stock price drops below the conversion price the investor would start to be exposed the underlying
1168:
This volatility/credit dichotomy is the standard practice for valuing convertibles. What makes convertibles so interesting is that, except in the case of exchangeables (see above), one cannot entirely separate the volatility from the credit. Higher volatility (a good thing) tends to accompany
1526:
such as the majority of French convertibles and zero-coupon Liquid Yield Option Notes (LYONs), provide a fixed interest return at issue which is significantly (or completely) accounted for by the appreciation to the redemption price. If, however, the bonds are converted by investors before the
1072:
Japan: This region represents about 8% of the total market as of
January 2013 in spite of being in the past comparable in size to the Northern American market. It mostly shrunk because of the low interest environment making the competitive advantage of lowering coupon payment less appealing to
811:
then have different dynamics and risks associated with them since at maturity the holder would not receive some cash or shares but some cash and potentially some share. They would for instance miss the modified duration mitigation effect usual with plain vanilla convertibles structures.
1003:: The ability of the holder of the bond (the lender) to force the issuer (the borrower) to repay the loan at a date earlier than the maturity. These often occur as windows of opportunity, every three or five years and allow the holders to exercise their right to an early repayment.
1053:
which helps in terms of price transparency. One other particularity of this market is the importance of the Mandatory Convertibles and Preferred especially for Financials (about 10–20% of the issuances in the US regional benchmarks). Most of the trading operation are based in
1015:: Conversion price would be reset to a new value depending on the underlying stock performance. Typically, would be in cases of underperformance (e.g. if stock price after a year is below 50% of the conversion price the new conversion price would be the current stock price).
879:: The date on which the principal (par value) of the bond (and all remaining interest) are due to be paid. In some cases, for non-vanilla convertible bonds, there is no maturity date (i.e. perpetual), this is often the case with preferred convertibles (e.g. US0605056821).
1090:
The splits between those investors differ across the regions: In 2013, the American region was dominated by Hedged Investors (about 60%) while EMEA was dominated by Long-Only investors (about 70%). Globally the split is about balanced between the two categories.
1064:
without a price reporting system (e.g. like TRACE). Liquidity is significantly lower than on the Northern American market. Trading convention are NOT uniform: French Convertibles would trade dirty in units while the others countries would trade clean in notional
770:
Underwriters have been quite innovative and provided several variations of the initial convertible structure. Although no formal classification exists in the financial market it is possible to segment the convertible universe into the following sub-types:
1169:
weaker credit (bad). In the case of exchangeables, the credit quality of the issuer may be decoupled from the volatility of the underlying shares. The true artists of convertibles and exchangeables are the people who know how to play this balancing act.
891:: Yield of the convertible bond at the issuance date, could be different from the coupon value if the bond is offering a premium redemption. In those cases the yield value would determine the premium redemption value and intermediary put redemption value.
1499:
and the cost of debt. Convertibles can provide additional funding when the straight debt “window” may not be open. Subordination of convertible debt is often regarded as an acceptable risk by investors if the conversion rights are attractive by way of
718:
because the companies agree to give fixed or floating interest rate as they do in common bonds for the funds of investor. To compensate for having additional value through the option to convert the bond to stock, a convertible bond typically has a
1068:
Asia (ex Japan): This region represents about 17% of the total market, with an overall structure similar to the EMEA market albeit with more standardisation across the issuances. Most of the trading is done in Hong-Kong with a minor portion in
1323:
849:
considered as exchangeable as the ultimate guarantor being the same as the underlying stock company (e.g. typical in the case of the Sukuk, Islamic convertible bonds, needing a specific legal setup to be compliant with the Islamic law).
825:
Contingent convertibles are a variation of the mandatory convertibles. They are automatically converted into equity if a pre-specified trigger event occurs, for example if the value of assets is below the value of its guaranteed debt.
901:
value, this is the value of a convertible bond's fixed income elements (regular interest payments, payment of principal at maturity and a superior claim on assets compared to common stock) excluding the ability to convert into
1495:. Convertibles can be used to increase the total amount of debt a company has in issue. The market tends to expect that a company will not increase straight debt beyond certain limits, without it negatively impacting upon the
913:
The conversion ratio is the number of shares the investor receives when exchanging the bond for common stock. The conversion price is the price paid per share to acquire the shares when exchanging the bond for common
2654:
986:: Immediate value of the convertible if converted, typically obtained as current stock price multiplied by the conversion ratio expressed for a base of 100. May also be known as Exchange Property.
1565:
Nevertheless, none of the (possibly substantial) preference dividend cost incurred when servicing a convertible preference share is visible in the pro-forma consolidated pretax profits statement.
1571:
until the tighter terms achievable on Euroconvertible bonds resulted in Euroconvertible new issues eclipsing domestic convertibles (including convertible preference shares) from the mid 1980s.
735:
payment. The advantage for companies of issuing convertible bonds is that, if the bonds are converted to stocks, companies' debt vanishes. However, in exchange for the benefit of reduced
2647:
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1560:(IASB) put a stop to treating convertible preference shares as equity. Instead it has to be classified both as (1) preference capital and as (2) convertible as well.
1165:
Using the market price of the convertible, one can determine the implied volatility (using the assumed spread) or implied spread (using the assumed volatility).
1161:
the credit spread for the fixed income portion that takes into account the firm's credit profile and the ranking of the convertible within the capital structure.
1553:
1189:
544:
2608:
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stock performance and no longer able to redeem at par its bond. This negative convexity would be compensated by a usually high regular coupon payment.
2194:
2190:
840:
Foreign currency convertibles are any convertible bonds whose face value is issued in a currency different from issuing company's domestic currency.
2614:
1557:
1443:. Convertible bonds allow issuers to issue debt at a lower cost. Typically, a convertible bond at issue yields 1% to 3% less than straight bonds.
714:
Convertible bonds are most often issued by companies with a low credit rating and high growth potential. Convertible bonds are also considered
2221:
1050:
411:
1421:, thus depressing the market value for a stock, and allowing the debt-holder to claim more stock with which to sell short. This is known as
1245:
Also, convertible bonds are usually less volatile than regular shares. Indeed, a convertible bond behaves like a call option. Therefore, if
2544:
2539:
1406:
The simultaneous purchase of convertible bonds and the short sale of the same issuer's common stock is a hedge fund strategy known as
1057:
835:
1968:
1943:
1844:
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3121:
1207:
Since 1991–92, most market-makers in Europe have employed binomial models to evaluate convertibles. Models were available from
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Ammann, Manuel; Kind, Axel; Wilde, Christian (2003). "Are Convertible Bonds Underpriced?: An Analysis of the French Market".
1860:
Ammann, Manuel; Kind, Axel; Wilde, Christian (2003). "Are Convertible Bonds Underpriced?: An Analysis of the French Market".
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873:: Periodic interest payment paid to the convertible bond holder from the issuer. Could be fixed or variable or equal to zero.
599:
584:
386:
3180:
513:
335:
2974:
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Convertible bonds are usually issued offering a higher yield than obtainable on the shares into which the bonds convert.
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61:
885:: Final date at which the holder can request the conversion into shares. Might be different from the redemption date.
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1410:. The motivation for such a strategy is that the equity option embedded in a convertible bond is a source of cheap
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From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash
2090:
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perception was that gearing was less with a convertible than if straight debt was used instead. In the UK the
1044:
Convertibles are not spread equally and some slight differences exist between the different regional markets:
595:
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A simple method for calculating the value of a convertible involves calculating the present value of future
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728:, where a long position in the convertible bond is balanced by a short position in the underlying equity.
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406:
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Conversion @ 130%). Regarding the trading, the American convertible market is "centralised" around
518:
1225: Consequently, Valuation models need to capture credit risk and handle potential price jump.
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with debt- and equity-like features. It originated in the mid-19th century, and was used by early
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1318:{\displaystyle \Delta ={\frac {\delta C}{\delta S}}\Rightarrow \delta C=\Delta \times \delta S.}
1077:
Convertible bond investors get split into two broad categories: Hedged and Long-only investors.
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1897:"Understanding Venture Capital Structure: A Tax Explanation for Convertible Preferred Stock"
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Equity & Credit hedging would typically be excluded from the scope of their strategy.
2193:. Explains both plain convertible debt and a simplified form of convertible debt called
1833:
A Financial History of the United States: From Christopher Columbus to the Robber Barons
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same time, convertible bonds can provide the possibility of high equity-like returns.
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Market conversion premium per share = market conversion price - current market price
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Convertible Note Term Sheet Generator from Wilson Sonsini Goodrich & Rosati
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Market conversion price = market price of convertible bond / conversion ratio
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Journal of Derivatives & Hedge Funds, volume 19, issue 4. Pages 259–277.
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2013:
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From a valuation perspective, a convertible bond consists of two assets: a
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Pricing Convertible Bonds using Partial Differential Equations – by Lucy Li
2162:
A simple and precise method for pricing convertible bonds with credit risk.
1938:(third ed.). Upper Saddle River, NJ: Prentice-Hall, Inc. p. 376.
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Harvard i-lab | Foundations of Financings and Capital Raising for Startups
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Pricing Inflation-Indexed Convertible Bonds – by Landskroner and Raviv
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2014:"Cocos: Contingent Convertible Capital Notes and Insurance Reserves"
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payments, the value of shareholder's equity is reduced due to the
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that the holder can convert into a specified number of shares of
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1961:
The Handbook of Fixed Income Securities, Frank J. Fabozzi ed
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if it has a maturity of greater than 10 years) is a type of
1417:
In limited circumstances, certain convertible bonds can be
1467:
Higher conversion price than a rights issue strike price
1461:
Higher conversion price than a rights issue strike price
1158:
the underlying stock volatility to value the option and
1113:
of a convertible debenture should never drop below its
2621:
Securities Industry and Financial Markets Association
2089:
Ammann, Manuel; Kind, Axel; Wilde, Christian (2007).
1414:, which can be exploited by convertible arbitrageurs.
1368:
1336:
1261:
1142:
Out-the-money: Conversion Price is > Equity Price.
1136:
In-the-money: Conversion Price is < Equity Price.
1132:
The 3 main stages of convertible bond behaviour are:
1963:(5th ed.). New York: McGraw Hill. p. 296.
1511:
Maximising funding permitted under pre-emption rules
1505:
Maximising funding permitted under pre-emption rules
3082:
3020:
2868:
2758:
2747:
2674:
2601:
2558:
2522:
2424:
2318:
2260:
2145:
Bond valuation practical guide and calculator tool.
1154:. Valuing a convertible requires an assumption of
587:. Unsourced material may be challenged and removed.
1386:
1354:
1317:
1139:At-the-money: Conversion Price is = Equity Price.
754:Convertible notes are also a frequent vehicle for
1589:2010 U.S. equity-linked underwriting league table
1105:Lattice model (finance) § Hybrid securities
2153:Future Returns: The Case for Convertible Bonds.
2091:"Simulation-Based Pricing of Convertible Bonds"
1454:Locking into low fixed–rate long-term borrowing
1448:Locking into low fixed–rate long-term borrowing
1402:, which can be interpreted as less volatility.
1117:. The intrinsic value is simply the number of
990:Convertibles may have other features, such as:
724:below fair value—lead naturally to the idea of
1249:is the call price and S the regular share then
2648:
2215:
905:The issuance prospectus will state either a
538:
8:
3249:
3239:
2755:
2655:
2641:
2633:
2609:Commercial Mortgage Securities Association
2222:
2208:
2200:
1493:Increasing the total level of debt gearing
1487:Increasing the total level of debt gearing
1200:. However, also valuation models based on
545:
531:
29:
2195:SAFE (Simple Agreement for Future Equity)
2128:Lattice model (finance)#Hybrid securities
1367:
1335:
1268:
1260:
647:Learn how and when to remove this message
2615:International Capital Market Association
1592:
1558:International Accounting Standards Board
964:
931:
743:expected when bondholders convert their
1895:Gilson, Ronald; Schizer, David (2003).
1800:
353:
325:
286:
183:
125:
76:
37:
1394:, which implies that the variation of
1936:Bond Markets, Analysis and Strategies
7:
1387:{\displaystyle \delta C<\delta S}
585:adding citations to reliable sources
2545:Commercial mortgage-backed security
1101:Bond option § Embedded options
865:Structure, features and terminology
2540:Collateralized mortgage obligation
1343:
1300:
1262:
1184:and adds the present value of the
1125:times the current market price of
836:Foreign currency convertible bonds
25:
1355:{\displaystyle 0<\Delta <1}
1237:Convertible bonds are safer than
691:or cash of equal value. It is a
3248:
3238:
1808:Scatizzi, Cara (February 2009).
1441:Lower fixed-rate borrowing costs
1435:Lower fixed-rate borrowing costs
561:
45:
1524:Premium redemption convertibles
1518:Premium redemption convertibles
572:needs additional citations for
288:Over-the-counter (off-exchange)
3035:Debtor-in-possession financing
2535:Collateralized debt obligation
2411:Reverse convertible securities
2056:Journal of Banking and Finance
1862:Journal of Banking and Finance
1627:Bank of America Merrill Lynch
1398:is less than the variation of
1288:
1:
2068:10.1016/S0378-4266(01)00256-4
2012:Hirst, Gary (June 21, 2013).
1959:Ritchie Jr., John C. (1997).
1874:10.1016/S0378-4266(01)00256-4
1036:Markets and investor profiles
830:Foreign currency convertibles
514:Sustainable development goals
2975:Staggered board of directors
2098:Journal of Empirical Finance
3092:Accretion/dilution analysis
2351:Contingent convertible bond
2156:Barron's. December 3, 2019.
1764:Contingent convertible bond
1192:as well as the more common
821:Contingent convertible bond
3306:
3055:Leveraged recapitalization
2391:Inverse floating rate note
1934:Fabozzi, Frank J. (1996).
1098:
833:
818:
3234:
3226:Valuation using multiples
3211:Sum-of-the-parts analysis
3181:Modigliani–Miller theorem
3040:Dividend recapitalization
2855:Secondary market offering
2237:
1831:Jerry W. Markham (2002).
951:Market conversion premium
775:Vanilla convertible bonds
397:Diversification (finance)
3244:List of investment banks
3159:Free cash flow to equity
2985:Super-majority amendment
2910:Management due diligence
2850:Seasoned equity offering
2550:Mortgage-backed security
2319:Types of bonds by payout
2261:Types of bonds by issuer
1480:Voting dilution deferred
1474:Voting dilution deferred
1211:, Trend Data of Canada,
1190:finite difference models
877:Maturity/redemption date
858:Synthetically structured
2955:Shareholder rights plan
2945:Post-merger integration
2915:Managerial entrenchment
2885:Contingent value rights
2825:Initial public offering
1641:Goldman Sachs & Co
1019:Change of control event
918:Market conversion price
815:Contingent convertibles
3097:Adjusted present value
2960:Special-purpose entity
2798:Direct public offering
2768:At-the-market offering
2484:Option-adjusted spread
2386:Inflation-indexed bond
1789:Liquidation preference
1423:death spiral financing
1388:
1356:
1330:In consequence, since
1319:
784:Mandatory convertibles
362:Alternative investment
3112:Conglomerate discount
2530:Asset-backed security
2494:Weighted-average life
2331:Auction rate security
1408:convertible arbitrage
1389:
1357:
1320:
1007:Contingent conversion
883:Final conversion date
806:Packaged convertibles
726:convertible arbitrage
677:convertible debenture
494:Investment management
407:Environmental finance
3134:Economic value added
3129:Discounted cash flow
2523:Securitized products
1774:Convertible security
1739:Jefferies Group Inc
1366:
1334:
1259:
797:Reverse convertibles
581:improve this article
2719:Senior secured debt
2300:Infrastructure bond
2106:10.2139/ssrn.762804
1810:"Convertible Bonds"
1202:Monte Carlo methods
1121:being converted at
519:Sustainable finance
33:Part of a series on
3254:Outline of finance
3166:Market value added
3149:Financial modeling
3107:Business valuation
3030:Debt restructuring
2808:Follow-on offering
2793:Corporate spin-off
2751:(terms/conditions)
2668:investment banking
2376:Floating rate note
1901:Harvard Law Review
1812:. The AAII Journal
1779:Equity-linked note
1546:takeover currency.
1384:
1352:
1315:
1229:Uses for investors
897:: Also known as
596:"Convertible bond"
509:Speculative attack
274:Structured product
3285:Corporate finance
3262:
3261:
3186:Net present value
3171:Minority interest
3102:Associate company
3078:
3077:
3045:Financial sponsor
2965:Special situation
2935:Pre-emption right
2925:Minority discount
2835:Private placement
2734:Subordinated debt
2689:Exchangeable debt
2676:Capital structure
2664:Corporate finance
2630:
2629:
2583:Exchangeable bond
2509:Yield to maturity
2361:Exchangeable bond
2283:Subordinated debt
2039:Dilutive security
1784:Exchangeable bond
1749:
1748:
1711:Barclays Capital
1669:Deutsche Bank AG
1602:Market share (%)
1286:
972:
971:
939:
938:
911:conversion price.
844:Exchangeable bond
760:startup companies
657:
656:
649:
631:
555:
554:
382:Banks and banking
372:Asset (economics)
198:Credit derivative
166:Stock certificate
39:Financial markets
16:(Redirected from
3297:
3290:Embedded options
3280:Commercial bonds
3252:
3251:
3242:
3241:
3144:Fairness opinion
3139:Enterprise value
3122:Weighted average
3050:Leveraged buyout
2905:Drag-along right
2803:Equity carve-out
2760:Equity offerings
2756:
2752:
2724:Shareholder loan
2709:Second lien debt
2704:Preferred equity
2684:Convertible debt
2657:
2650:
2643:
2634:
2573:Convertible bond
2416:Zero-coupon bond
2356:Convertible bond
2341:Commercial paper
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907:conversion ratio
709:market cornering
673:convertible debt
669:convertible note
665:convertible bond
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489:Impact investing
484:Growth investing
217:Foreign exchange
203:Futures exchange
151:Registered share
49:
30:
21:
18:Convertible loan
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3275:Bonds (finance)
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3206:Stock valuation
3201:Residual income
3117:Cost of capital
3074:
3070:Project finance
3060:High-yield debt
3016:
2995:Tag-along right
2920:Mandatory offer
2890:Control premium
2871:
2864:
2840:Public offering
2788:Bought out deal
2750:
2749:
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2670:
2661:
2631:
2626:
2597:
2588:Extendible bond
2578:Embedded option
2554:
2518:
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2381:High-yield debt
2371:Fixed rate bond
2366:Extendible bond
2314:
2295:Government bond
2290:Distressed debt
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2137:Further reading
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1839:. p. 161.
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1769:Preferred stock
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1655:Morgan Stanley
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1204:are available.
1198:trinomial trees
1115:intrinsic value
1109:In theory, the
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1038:
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693:hybrid security
687:in the issuing
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392:Climate finance
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208:Hybrid security
146:Preferred stock
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107:High-yield debt
102:Government bond
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3065:Private equity
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2426:Bond valuation
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2170:External links
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2081:
2062:(4): 635–653.
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2030:
2004:
2001:. p. 376.
1999:Fabozzi op cit
1990:
1987:. p. 376.
1985:Fabozzi op cit
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1907:(3): 874–916.
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1868:(4): 635–653.
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2991:
2988:
2986:
2983:
2981:
2978:
2976:
2973:
2971:
2968:
2966:
2963:
2961:
2958:
2956:
2953:
2951:
2948:
2946:
2943:
2941:
2938:
2936:
2933:
2931:
2928:
2926:
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2918:
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2913:
2911:
2908:
2906:
2903:
2901:
2898:
2896:
2893:
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2878:
2877:
2875:
2873:
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2861:
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2856:
2853:
2851:
2848:
2846:
2843:
2841:
2838:
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2833:
2831:
2828:
2826:
2823:
2819:
2816:
2815:
2814:
2811:
2809:
2806:
2804:
2801:
2799:
2796:
2794:
2791:
2789:
2786:
2784:
2781:
2779:
2776:
2774:
2773:Book building
2771:
2769:
2766:
2765:
2763:
2761:
2757:
2754:
2746:
2740:
2737:
2735:
2732:
2730:
2727:
2725:
2722:
2720:
2717:
2715:
2712:
2710:
2707:
2705:
2702:
2700:
2697:
2695:
2692:
2690:
2687:
2685:
2682:
2681:
2679:
2677:
2673:
2669:
2665:
2658:
2653:
2651:
2646:
2644:
2639:
2638:
2635:
2622:
2619:
2616:
2613:
2610:
2607:
2606:
2604:
2600:
2594:
2593:Puttable bond
2591:
2589:
2586:
2584:
2581:
2579:
2576:
2574:
2571:
2569:
2568:Callable bond
2566:
2565:
2563:
2561:
2557:
2551:
2548:
2546:
2543:
2541:
2538:
2536:
2533:
2531:
2528:
2527:
2525:
2521:
2515:
2512:
2510:
2507:
2505:
2502:
2500:
2497:
2495:
2492:
2490:
2487:
2485:
2482:
2480:
2479:Nominal yield
2477:
2475:
2472:
2470:
2467:
2465:
2462:
2460:
2457:
2455:
2454:Current yield
2452:
2450:
2449:Credit spread
2447:
2445:
2442:
2440:
2437:
2435:
2432:
2431:
2429:
2427:
2423:
2417:
2414:
2412:
2409:
2407:
2406:Puttable bond
2404:
2402:
2399:
2397:
2394:
2392:
2389:
2387:
2384:
2382:
2379:
2377:
2374:
2372:
2369:
2367:
2364:
2362:
2359:
2357:
2354:
2352:
2349:
2347:
2344:
2342:
2339:
2337:
2336:Callable bond
2334:
2332:
2329:
2327:
2324:
2323:
2321:
2317:
2311:
2308:
2306:
2303:
2301:
2298:
2296:
2293:
2291:
2288:
2284:
2281:
2279:
2276:
2275:
2274:
2271:
2269:
2266:
2265:
2263:
2259:
2253:
2250:
2248:
2245:
2243:
2240:
2239:
2236:
2232:
2225:
2220:
2218:
2213:
2211:
2206:
2205:
2202:
2196:
2192:
2189:
2187:
2184:
2182:
2179:
2177:
2174:
2173:
2169:
2164:
2163:
2158:
2155:
2154:
2149:
2147:
2146:
2141:
2140:
2136:
2129:
2123:
2120:
2115:
2111:
2107:
2103:
2099:
2092:
2085:
2082:
2077:
2073:
2069:
2065:
2061:
2057:
2050:
2047:
2044:
2040:
2034:
2031:
2019:
2018:garyhirst.com
2015:
2008:
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1977:
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1970:0-7863-1095-2
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1952:
1947:
1945:0-13-339151-5
1941:
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1930:
1927:
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1914:
1910:
1906:
1902:
1898:
1891:
1888:
1883:
1879:
1875:
1871:
1867:
1863:
1856:
1853:
1848:
1846:0-7656-0730-1
1842:
1838:
1834:
1827:
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1811:
1804:
1801:
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1608:
1605:Amount ($ m)
1604:
1601:
1598:
1595:
1594:
1588:
1583:
1580:
1579:
1575:
1569:
1568:
1564:
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1539:
1536:
1535:
1531:
1525:
1522:
1521:
1517:
1512:
1509:
1508:
1504:
1500:compensation.
1498:
1497:credit rating
1494:
1491:
1490:
1486:
1481:
1478:
1477:
1473:
1468:
1465:
1464:
1460:
1455:
1452:
1451:
1447:
1442:
1439:
1438:
1434:
1429:
1424:
1420:
1416:
1413:
1409:
1405:
1404:
1403:
1401:
1397:
1381:
1378:
1375:
1372:
1369:
1349:
1346:
1340:
1337:
1312:
1309:
1306:
1303:
1297:
1294:
1291:
1282:
1279:
1274:
1271:
1265:
1255:
1254:
1253:
1252:
1248:
1244:
1240:
1236:
1233:
1232:
1228:
1226:
1219:
1217:
1214:
1210:
1205:
1203:
1199:
1195:
1191:
1187:
1183:
1179:
1175:
1170:
1166:
1160:
1157:
1156:
1155:
1153:
1149:
1141:
1138:
1135:
1134:
1133:
1130:
1128:
1127:common shares
1124:
1120:
1116:
1112:
1106:
1102:
1094:
1092:
1084:
1080:
1079:
1078:
1071:
1067:
1063:
1059:
1056:
1052:
1047:
1046:
1045:
1042:
1041:asset class.
1035:
1030:
1027:
1024:
1020:
1017:
1014:
1011:
1008:
1005:
1002:
999:
996:
995:Call features
993:
992:
991:
985:
982:
981:
967:
966:
963:
962:
961:
960:
959:
958:
957:
956:
952:
949:
948:
934:
933:
930:
929:
928:
927:
926:
925:
924:
923:
919:
916:
912:
908:
904:
900:
899:straight bond
896:
893:
890:
887:
884:
881:
878:
875:
872:
869:
868:
864:
862:
859:
852:
850:
843:
841:
837:
829:
827:
822:
814:
812:
805:
803:
796:
794:
792:
791:risk reversal
783:
781:
774:
772:
765:
763:
761:
757:
752:
750:
746:
742:
738:
734:
729:
727:
722:
717:
716:debt security
712:
710:
706:
702:
698:
694:
690:
686:
682:
678:
674:
670:
666:
662:
651:
648:
640:
629:
626:
622:
619:
615:
612:
608:
605:
601:
598: –
597:
593:
592:Find sources:
586:
582:
576:
575:
570:This article
568:
564:
559:
558:
548:
543:
541:
536:
534:
529:
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460:
458:
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453:
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433:
430:
428:
425:
423:
420:
419:
418:
415:
413:
410:
408:
405:
403:
402:Eco-investing
400:
398:
395:
393:
390:
388:
385:
383:
380:
378:
377:Asset pricing
375:
373:
370:
368:
365:
363:
360:
359:
358:
357:
354:Related areas
352:
347:
344:
342:
339:
337:
334:
333:
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324:
318:
315:
313:
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240:
237:
236:
230:
229:Exchange rate
227:
225:
221:
220:
218:
209:
206:
204:
201:
199:
195:
194:
192:
188:
187:
184:Other markets
182:
177:
176:Watered stock
174:
172:
169:
167:
164:
162:
159:
157:
154:
152:
149:
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142:
139:
137:
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83:
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67:
63:
60:
58:
57:Public market
55:
54:
53:
52:
48:
44:
43:
40:
36:
32:
31:
19:
3196:Real options
3012:Tender offer
2872:acquisitions
2860:Underwriting
2845:Rights issue
2748:Transactions
2683:
2602:Institutions
2572:
2560:Bond options
2504:Yield spread
2396:Lottery bond
2355:
2326:Accrual bond
2252:Fixed income
2161:
2152:
2150:Max, Kevin.
2144:
2142:FinPricing.
2122:
2097:
2084:
2059:
2055:
2049:
2033:
2021:. Retrieved
2017:
2007:
1998:
1993:
1984:
1979:
1960:
1954:
1935:
1929:
1904:
1900:
1890:
1865:
1861:
1855:
1837:M. E. Sharpe
1832:
1826:
1814:. Retrieved
1803:
1750:
1613:J.P. Morgan
1599:Underwriter
1581:
1537:
1523:
1510:
1492:
1479:
1466:
1453:
1440:
1399:
1395:
1329:
1246:
1223:
1213:Bloomberg LP
1206:
1182:cost of debt
1171:
1167:
1164:
1145:
1131:
1111:market price
1108:
1089:
1076:
1043:
1039:
1029:Non-dilutive
1028:
1018:
1012:
1006:
1001:Put features
1000:
994:
989:
983:
950:
917:
910:
906:
898:
894:
888:
882:
876:
870:
856:
847:
839:
824:
809:
800:
787:
778:
769:
753:
730:
713:
701:Jacob Little
685:common stock
676:
672:
668:
664:
658:
643:
634:
624:
617:
610:
603:
591:
579:Please help
574:verification
571:
504:Market trend
479:Greenwashing
336:Participants
141:Growth stock
136:Common stock
127:Stock market
97:Fixed income
65:
27:Type of bond
2970:Squeeze-out
2940:Proxy fight
2870:Mergers and
2783:Bought deal
2714:Senior debt
2499:Yield curve
2459:Dirty price
2434:Clean price
2310:Global bond
2278:Senior debt
2268:Agency bond
2231:Bond market
2159:Xiao, Tim.
2043:Diluted EPS
1816:8 September
1745:$ 1,522.50
1731:$ 1,589.20
1717:$ 1,969.22
1703:$ 2,405.97
1689:$ 2,614.43
1675:$ 2,748.52
1661:$ 3,077.95
1647:$ 4,370.56
1633:$ 5,369.23
1619:$ 7,359.72
1554:predecessor
1065:equivalent.
707:to counter
705:Daniel Drew
697:speculators
637:August 2018
499:Market risk
312:Spot market
269:Reinsurance
264:Real estate
254:Mutual fund
191:Derivatives
161:Stockbroker
78:Bond market
3269:Categories
3216:Tax shield
3176:Mismarking
2980:Stock swap
2930:Pitch book
2900:Divestment
2778:Bookrunner
2699:Pari passu
1795:References
1419:sold short
1412:volatility
1099:See also:
1069:Singapore.
895:Bond floor
607:newspapers
341:Regulation
69:Securities
3191:Pure play
3084:Valuation
2950:Sell side
2813:Greenshoe
2439:Convexity
2247:Debenture
2114:233758183
2023:April 13,
1753:Bloomberg
1379:δ
1370:δ
1344:Δ
1307:δ
1304:×
1301:Δ
1292:δ
1289:⇒
1280:δ
1272:δ
1263:Δ
1239:preferred
1178:principal
1123:par value
1095:Valuation
1054:New-York.
902:equities.
747:into new
442:corporate
417:Financial
239:Commodity
3022:Leverage
3000:Takeover
2895:Demerger
2880:Buy side
2514:Z-spread
2469:I-spread
2464:Duration
1758:See also
1751:Source:
1174:interest
737:interest
733:interest
699:such as
467:services
457:personal
452:forecast
422:analysis
346:Clearing
298:Forwards
224:Currency
62:Exchange
3005:Reverse
2990:Synergy
2830:Pre-IPO
2818:Reverse
2739:Warrant
2623:(SIFMA)
1921:1342584
1556:to the
1362:we get
1186:warrant
1152:warrant
1023:Ratchet
689:company
661:finance
621:scholar
474:Fintech
437:betting
427:analyst
327:Trading
303:Options
2617:(ICMA)
2611:(CMSA)
2444:Coupon
2346:Consol
2112:
2076:268470
2074:
1967:
1942:
1919:
1882:268470
1880:
1843:
1209:INSEAD
1150:and a
1119:shares
1103:, and
984:Parity
914:stock.
871:Coupon
749:shares
721:coupon
675:(or a
623:
616:
609:
602:
594:
462:public
259:Option
64:
2729:Stock
2110:S2CID
2094:(PDF)
2037:See:
1917:JSTOR
1683:Citi
1644:12.5
1630:15.3
1616:21.0
1596:Rank
1051:TRACE
1021:(aka
1013:Reset
909:or a
889:Yield
766:Types
745:bonds
671:, or
628:JSTOR
614:books
447:crime
432:asset
317:Swaps
249:Money
156:Stock
2666:and
2242:Bond
2126:See
2072:SSRN
2041:and
2025:2014
1965:ISBN
1940:ISBN
1878:SSRN
1841:ISBN
1818:2015
1742:4.3
1728:4.5
1725:UBS
1714:5.6
1700:6.9
1686:7.5
1672:7.8
1658:8.8
1376:<
1347:<
1341:<
1220:Risk
1196:and
1176:and
1148:bond
1058:EMEA
703:and
681:bond
663:, a
600:news
387:Bull
2102:doi
2064:doi
1909:doi
1905:116
1870:doi
1736:10
1062:OTC
789:a "
758:in
659:In
583:by
412:ESG
244:ETF
3271::
2108:.
2100:.
2096:.
2070:.
2060:27
2058:.
2016:.
1915:.
1903:.
1899:.
1876:.
1866:27
1864:.
1835:.
1722:9
1708:8
1694:7
1680:6
1666:5
1652:4
1638:3
1624:2
1610:1
1129:.
751:.
711:.
667:,
2656:e
2649:t
2642:v
2223:e
2216:t
2209:v
2116:.
2104::
2078:.
2066::
2027:.
1973:.
1948:.
1923:.
1911::
1884:.
1872::
1849:.
1820:.
1425:.
1400:S
1396:C
1382:S
1373:C
1350:1
1338:0
1313:.
1310:S
1298:=
1295:C
1283:S
1275:C
1266:=
1247:C
650:)
644:(
639:)
635:(
625:·
618:·
611:·
604:·
577:.
546:e
539:t
532:v
231:)
222:(
210:)
196:(
66:·
20:)
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.