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Definition of Bond value of the convertible bond - Finance dictionary
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Bond value of the convertible bond (See Chapter 25 of the Vernimmen)
The value of a convertible Bond is made of three components: value of a straight Bond, conversion value of a convertible Bond, and Time value (this is a value of a Call option on shares of the issuer). Bond value of a convertible Bond is the value of a straight Bond. This value is derived by Discounting Future cash flows of a convertible Bond at a Market Rate of return for the level of Risk of this issuer, as if a convertible Bond were a straight Bond.
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Bond value of the convertible bond (See Chapter 25 of the Vernimmen)
The value of a convertible Bond is made of three components: value of a straight Bond, conversion value of a convertible Bond, and Time value (this is a value of a Call option on shares of the issuer). Bond value of a convertible Bond is the value of a straight Bond. This value is derived by Discounting Future cash flows of a convertible Bond at a Market Rate of return for the level of Risk of this issuer, as if a convertible Bond were a straight Bond.
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