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components of a callable bonda callable bond can be thought of as the sale of a call option by the investor to the issuer as it allows the issuer to
the zero-volatility spread is a measure of the spread that the investor would realize over the entire treasury spot rate curve if a
convertible bonds can be classified into different types such as callable bonds and puttable bonds these bonds are discussed as followsbasics of
after the calculation of cash flow yield and the average life of the asset-backed and mortgage-backed security based on
bonds potential returns are calculated using measures like yield to maturity ytm and cash flow yield both these measures are
break even periodit is also important to compare the returns from the equity stock and the bond to determine the profitability of both investments
a cash-flow yield is the discount rate that makes the price of a mortgage-backed or asset-backed security equal to the
value of conversion benefitshaving seen the measure used to analyze the convertible bonds let us now examine the merits and demerits of convertible
basics of convertible bondsthe provision of conversion in a corporate bond entitles the bondholder the right to convert the bond into a predetermined
types of warrantsthe warrants can be classified into different types they aredetachable warrants these warrants are issued with most debentures like
advantages to the investorsthe warrant acts as a sweetener and ensures a better subscription to the ncds especially for companies with good track
let us consider three scenarios of changes in stock prices and look into the risk return profile of the convertible security let us
value of a warrantthe market price of a warrant fluctuates between minimum and maximum limits when the current market price of the stock ps is
when an investor purchases non-callable or non-putable convertible bonds he would be buying a non-callablenon-putable straight security
characteristics of warrantsas mentioned earlier a warrant is a variant of a call option and gives the holder a certain right to purchase shares of
bonds with warrantswarrants are usually attached with the bonds or preference shares to attract the investor the objective is to induce the potential
if the issuer company is taken over then the bondholders are likely to suffer it is due to lowering of the stock prices in the market as
we have seen earlier that there are callable bonds this is a valuable feature for the issuers who consider that their stock is
we defined the conversion premium as the difference between the market price of the convertible and the conversion value the conversion
having seen the measure used for analyzing the convertible bonds let us now examine the merits and demerits of convertible
interference of central bank in marketssome dilemmas exist in the issue of central bank intervention in the market to correct the volatilities in the
policy conflicts in debt and monetary managementco-ordination of operations is important so as to avoid differences in the policies of cash and debt
significance of secondary marketshigh liquidity and constant demand in the market need a diversified investor base with different preferences of
role of primary dealersto promote the investment activity in the government securities market several countries have adopted licensed primary dealers
issuance calendarissuance calendar gives clear and timely information about the borrowing program of the government it clearly conveys the maturity