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Zero-coupon convertible bond Zero-Coupon Convertible Bond 1. A bond that may be converted into common stock in the company issuing it.
A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible option may or may not become worthwhile, depending on how the company is performing.
Additionally, like all zerosthey can fluctuate in pricesometimes dramatically, with changes in interest rates. A municipal bond that may be converted into a corporate bond in the company issuing it. They tend to be volatile in the secondary market because the convertible options may or may not become worthwhile, depending on how the companies they represent are performing.
These zero-coupon convertibles are tax-exemptbut are convertible to other bonds that may yield more.
A zero-coupon convertible bond, like other convertible bonds, can be converted into stock in the issuing corporation if the stock reaches the trigger price. Municipalities may issue tax-exempt zero-coupon convertible bonds you can exchange before maturity for conventional taxable bonds.
The advantage of both taxable and tax-exempt zero-coupon convertibles is that they give you access to a potentially substantial gain for a small initial investment since you purchase the zero-coupon for less than the face value. But like all zero-coupons, these convertibles tend to be more volatile in the secondary market than nonconvertible bonds.
Want to thank TFD for its existence? Link to this page:CORNING, INC.: ZERO COUPON CONVERTIBLE DEBENTURES The value, V, of a convertible bond was therefore just the sum of the straight bond’s value and the values of the embedded options: V CV Bond = V Straight Bond + V Option 1 + V Option 2 + + V Option n 6 Anderson and Henderson, Corning, Inc.
7 Corning prospectus for zero-coupon.
Corning Inc.: Zero Coupon Convertible Debentures (A) Harvard Case Study Solution and HBR and HBS Case Analysis Related Posts Boston Chicken Inc.: 4 12% Convertible .
Corning Inc.: Zero Coupon Convertible Debentures Due November 8, (A) Case Solution. The evaluation needs her to compare the insights accessible to those accessible from valuation evaluation from conventional illustrative ratios.
Zero-coupon bonds, which have higher yields to maturity because of their longer duration, are theoretically the proper benchmark for the Corning converts. However, the scarcity of comparably rated zero-coupon bonds in November prevented such a comparison in this case.
Holdings are subject to change. ProShares may invest in financial instruments (including derivatives) that, in combination, should have daily price return characteristics similar to the fund's benchmark. Corning Inc.: Zero Coupon Convertible Debentures Due November 8, (A) Case Solution.
The evaluation needs her to compare the insights accessible to those accessible from valuation evaluation from conventional illustrative ratios.