Corporate Finance #16 Convertible Bonds & Warrants

Learn to compute warrants' intrinsic value and speculation premium using market value, exercise price, and shares, and explore using warrants as a hedge in volatile markets.

Learn to compute the break-even price for warrants, incorporate the exercise price, assess intrinsic value and speculation premium, and back into unknown stock values using algebra or Excel goal seek.

Compute conversion value, conversion premium, and conversion price for convertible bonds, and consider how conversion options capture stock upside and potentially lower issuer interest costs.

Compute conversion value and conversion price for convertible bonds, derive the conversion ratio from par value, and assess bond price versus premium to explain the upside of conversion.

Analyze a NYSE-listed convertible bond quoted at 75% of par and compute value from the conversion ratio and stock price, determining conversion value, premium, and break-even stock price of 37.50.

Investigate how convertible bonds blend bond value with stock potential by comparing the pure bond value to market price and the conversion value of 31 shares at $40.

Compute the conversion value and ratio for a 9% semiannual convertible bond, compare pure bond value at 12% yield to the 945 market price, and identify a $9 conversion premium.

Analyze how convertible bonds couple conversion value and yield. See how stock moves from 43 to 31 dollars alter the conversion value, conversion premium, and current yield.

Explore how to value convertible bonds by comparing the conversion value to the pure bond value, and determine the crossover point using a conversion ratio and current stock price.

Analyze convertible bonds with a call feature by comparing conversion value (25 shares × $45 = $1,125) to the call price ($1,040) to decide whether to convert or be called.

Evaluate a convertible bond with a call feature, compare the conversion value (25×$45=$1,125) to the $1,040 call price, and show holders convert when the conversion value exceeds the call price.

Stock rises from 22 to 31, a 40.9% gain, while the warrant moves from 7 to 13, an 85.7% gain. Reveal leverage, intrinsic value, and speculative premium.

Explore a corporate finance practice problem on 1927 warrant exercise and rate of return calculations, showing how to compute intrinsic value, exercise value, and a 116% return from warrants.

Explore how warrant gains compare to common stock gains in a 75-warrant scenario, analyzing intrinsic value, exercise price, and percentage returns under leverage.

Compare the 1929 warrant gain versus stock gain with the same investment amount, showing warrants yield about 52.17% versus 15.38% on stocks and highlighting intrinsic value and exercise price effects.

Analyze convertible bonds and their impact on diluted earnings per share by comparing basic and diluted earnings per share under various conversion scenarios, including tax effects and adjusted net income.

Explore how convertible bonds derive price from conversion value versus pure bond value, highlighting the role of stock price, conversion ratio, and conversion premium in determining price.

Examine how a convertible bond's price responds to falling stock price by comparing conversion value to pure bond value; when pure value exceeds conversion value, it drives market price.

Learn to compute intrinsic value and speculation premium of warrants using exercise price, market price, and shares per warrant, with examples and investment implications.

Explore how to compute the break-even price for warrants in Excel, using intrinsic value, speculation premium, and goal seek with varying exercise prices, stock prices, and share counts.

Compute the conversion value and conversion premium for convertible bonds using par value, conversion ratio, and common stock price, and assess upside versus the bond.

Learn to calculate conversion value and conversion ratio for convertible bonds using par value, conversion price, and stock price, and assess bond price and conversion premium in Excel.

Explore convertible bonds pricing in an Excel practice, covering bond price, conversion value, conversion premium, and the conversion ratio with common stock price.

Learn to value convertible bonds by comparing pure bond value to market price, compute conversion value (31 shares at $40) and assess the conversion premium and alternative valuations.

Explore how to value convertible bonds by comparing conversion value to market price and pure bond value, using conversion price, conversion ratio, and present value methods with semiannual cash flows.

Explore a finance practice on a convertible bond in Excel, calculating conversion value, bond price, conversion premium, and current yield as stock price changes from 43 to 31.

Explore how to value a convertible bond by comparing its conversion value to the pure bond value, determine the crossover point, and compute the stock price at which values align.

Shows a practice problem on convertible bonds with a call feature, calculating the conversion value (25 × 45 = 1,125) and deciding to convert when it exceeds 1,040 call price.

Learn to price convertible bonds in Excel by computing conversion value, conversion premium, and bond price, then measure gain and rate of return over one year.

Compare percent increases in stock price and warrant price, using intrinsic value, exercise price, and speculative premium to illustrate leverage.

Practice problem shows calculating warrant exercise value and profit from exercising warrants, accounting for exercise price, stock price, shares per warrant, and the resulting rate of return.

Analyze a practical Excel exercise comparing warrant gain versus common stock gain, focusing on intrinsic value, exercise price, and speculative premium to illustrate leverage.

Compare stock vs warrant gains using the same investment in an Excel practice problem, showing how cheaper warrants enable more units and greater leverage through intrinsic value and exercise price.

Explore how convertible bonds are valued by comparing pure bond value versus conversion value, and how stock price movements and the conversion premium drive the bond price.

Analyze convertible bonds as stock price declines using pure bond value vs conversion value in Excel, focusing on how a falling price affects conversion decisions and bond pricing.