Convertible Bonds

Anybody have any tricks to remembering all the formulas for these things?

I have the same issue - just trying to memorize them and understand what they are trying to show… lots of fun…

The only crap ones to remember are favorable income diff and premium payback. Favorable Income Differential = Coupon - (ratio*dividends)/ratio Premium per Share = (Market Price Convertible/ratio) - Market Price of Stock Premium Pay Back = Premium Per Share/Favorable Income Differential

Not good with mnemonics. The only thing that works for me is figuring what the logic behind it. Like I think of Favorable income differential = Bond Income - Equity Income / Number of shares. where Number of shares = Conversion ratio Bond income = coupon Income from stock = Conversion Ratio * Dividend And so on. But that probably is not what you were looking for :slight_smile: