Can some one consolidate Convertible Bond formulas … Thanks
Convertible Price = Mktv Value of Bond / Converstion Ratio Converstion value = convertion ratio * stock price Premium over parity (I think thats what its called) = convertible price - convertible value Premium pay back = (Interest on convertible - Dividends on stocks) / (Premium over parity) I think this is the main stuff you should know. Also, remember that a convertible should never sell below its straight value (price of convertible free bond) or convertible value (price of mkt value of stock * convertion ratio), which ever one is higher.
AF Junkie Thanks
Premium pay back is also called favourable income differential…
Favourable income differential = coupon on bond/conv ratio - div on stock