财务管理基础 financial management 清华大学出版社22.pptVIP

22.* Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. ? Pearson Education Limited 2009. Created by Gregory Kuhlemeyer. Chapter 22 Convertibles, Exchangeables, and Warrants Describe the features of three common types of options that may be used by firms in their financing– the convertible security, the exchangeable bond, and the warrant. Understand why these securities with option features may be attractive for a firms long-term financing needs. Explain the different terms used to express value for convertible securities - conversion value, market value, and straight-bond value. Calculate the value of convertible securities, exchangeable bonds, and warrants and explain why premiums over different values occur. Understand the relationship between an option instrument and its underlying security. After Studying Chapter 22, you should be able to: Convertible Securities Use of Convertibles Value of Convertible Securities Exchangeable Bonds Warrants Convertibles, Exchangables, and Warrants Derivative Security – A financial contract whose value derives in part from the value and characteristics of one or more underlying assets (e.g., securities, commodities), interest rates, exchange rates, or indices. Straight debt or equity cannot be exchanged for another asset, but options are exchangeable. An option is part of the broader category of derivative securities. We examine the convertible security, exchangeable bond, and warrant in this chapter. Derivative Security Convertible Security – A bond or a preferred stock that is convertible into a specified number of shares of common stock at the option of the holder. This provides the convertible holder a fixed return (interest or dividend) and the option to exchange a bond or preferred stock for common stock. The option allows the company to sell convertible securities at a lower yield than it would have to pay on a straight bond or preferred stock issue. Convertible Security Conversion Price – Th