This entry was posted on April 19, 2010 at 5:57 pm and is filed under 债券. You can follow any responses to this entry through the RSS 2.0 feed.
2 Responses to How to you calculate the maximum gain and loss in a convertible bonds transaction?
Nino Brown on April 19, 2010 at 6:35 pm
Convertibles are hard because its an illiquid market, but like anything else, it is a market so you should be able to get a market quote from one of the dealers or brokerages out there.
Since Convertible Bonds are part stock and part bond, you kind of have to take into consideration the value of both for that company (if the stock is taking off, so will your conv bond, if not vice versa). and you also get a coupon, so in your return calculations figure out coupons since they are paying you cash.
good luck! convertibles are a great asset class, but because the market is dominated by institutions, its hard to get information and pricing. if you like them, take a look at some of the convertible funds out there.
Convertibles are hard because its an illiquid market, but like anything else, it is a market so you should be able to get a market quote from one of the dealers or brokerages out there.
Since Convertible Bonds are part stock and part bond, you kind of have to take into consideration the value of both for that company (if the stock is taking off, so will your conv bond, if not vice versa). and you also get a coupon, so in your return calculations figure out coupons since they are paying you cash.
good luck! convertibles are a great asset class, but because the market is dominated by institutions, its hard to get information and pricing. if you like them, take a look at some of the convertible funds out there.
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It’s really simple.
If the company goes bankrupt then the convertible bond is worthless, thus the maximum loss is 100% of the investment.
If the company ends up being vastly profitable then the bonds would be converted to equity and the maximum possible gain is essentially infinite.
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