Convertible Bonds
Examine features of the basic convertible bond, as well as alternative structures - advantages and disadvantages of convertibles from both the investor and issuer perspectives.
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Module 1: Introduction to Convertible Securities
- Terms and definitions
- Characteristics of convertible
- Types of convertible securities
- Markets for convertibles
- Legal and accounting issues
- Issuer and investor perspectives on convertibles
Module 2: Structure of Convertible Bonds
- Conversion ratio
- Conversion price
- Conversion period
- Anti-dilutive covenants
- Other protective covenants
- Call Features
- Seniority/security of issue
Module 3: Analysis of Convertible Bonds
- Investment value
- Credit analysis
- Interest rate sensitivity of convertibles
- Conversion value
- Conversion premium
- Recovery period
- Option based analyses of convertibles
- Black-Scholes based evaluation
- Binomial model based evaluation
- Risk/reward analysis
Module 1: Other Types of Convertible and Related Securities
- Convertible preferred stock
- Exchangeable convertible securities
- Convertible stock notes
- Asset linked convertibles
- Mandatory convertible (DECs,PERCs, ELKs, etc.)
- Synthetic convertibles
Module 2: Investing in Convertible Securities
- Lower risk equity alternative
- Diversifying fixed income portfolios
- Asset allocation implications
- Convertible securities as an asset class
Module 3: Convertible Securities Hedging Strategies
- Convertible stock hedge: long convertible/short underlying
- Bullish, bearish and neutral hedges
- Call option related strategies
- Put option hedging strategies
- Hedging convertible portfolios with index options