Talk:Convertible bond

Implying volatility?

This article suggests that it's possible to use convertible bond prices to imply stock price volatilities. I can't find any literature on this subject, can anyone please help me? (I tried to contact the user who added the paragraph, but unfortunately he hasn't filled in his email address or doesn't want to receive emails..)

re

Imply vol is a common measure. Any derivatives of an underlying can lead to a particular implied vol whic does not necessarily agree.

All implied vol means is that, given all other parameter's observation, the volatility of the underlying MUST be a certain % (i.e. the implied vol) in order to PREVENT ARBITRAGE.

Hence, in a perfect world, the implied vol of ALL derivatives must agree based on perfect info and such implied vol = actual vol of the underlying.

However, in a real world, mis-pricing of derivatives is a fact in life. Hence when we observe the implied vol of a put option disagreeing with the implied vol of a Convertible bond, all that means is that one of the two (or both) instruments is (are) mis-priced. And its the researchers and traders' job to find out which instrument is mis-priced by how much so as to make a profit. —Preceding unsigned comment added by Cowabunka (talk • contribs) 15:44, 11 March 2008 (UTC)

League tables

I'm not sure the league tables are particularly relevant. Should they be removed? Finnancier 12:22, 3 July 2007 (UTC)

COMMENT ON THE GRAPH The graph on the convertible bond looks PLAIN WRONG but I am hestitant to remove it; my last comments were labeled as "vandalism".

1. The issue price is shown as being the bond floor with no allowance bing made for the conversion option. The Issue price is indeed shown as being below the line denoting the convertible price.

2. From 120pct of the issue price upwards there is no premium erosion, despite a diminishing yield advantage, and the impact of call features and the cost of borrow.

3. The bond floor flatlines. Intuitively, the deeper a convertible is in the money, the more beneficial it is for the credit rating of a company, and the higher the bond floor is.

4. From 70pct to zero, the convertible bond value is shown as depreciating at a sharper rate (steeper) than the share price. This is COMPLETE NONSENSE. Busted bonds generally flatten out at around 7-20pct of their nominal value.

jimgrantham@fastmail.fm

Fair use rationale for Image:CoveredBonds.jpg

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A graph of convertible bond price vs stock price would be useful

BetacommandBot (talk) 21:26, 13 February 2008 (UTC)

Problems with: 2007 YTD Global Equity-Linked Underwriting League Table

There are a couple of problems with the2007 YTD Global Equity-Linked Underwriting League Table.

1. UBS appears twice in the list
2. the source is just marked as Bloomberg. A link would be much preferable and indeed verifiable.
   

Samcol1492 (talk) 02:29, 4 June 2010 (UTC)

Valuation section

This refers to a diagram that is no longer there, so it makes no sense - needs rewriting or a new diagram adding.Justinc (talk) 14:04, 12 April 2012 (UTC)

Types - Reverse convertibles - Possible error?

"Reverse convertibles are a less common variation, mostly issued synthetically. They would be opposite of the vanilla structure: the conversion price would act as a knock-in short call option"

From my understanding a Reverse convertible is a bond where you are forced to convert to equity if the price drops, thus this is a short put and not a short call, as with the short call you loose money only if the price goes up. Let me know if I am correct so that we can fix the possible error. --Mamo139 (talk) 16:45, 19 December 2013 (UTC)

Improvements needed

Greetings Wikipedians! I commend all the contributors for their efforts. But I noticed that this article lacks inline citations to reliable, verifiable sources. The Valuation section contains only one citation, and there are none at all in the following sections:

• Types
• Additional features
• Structure and terminology
• Markets and investor profiles
• Risk
• Uses for investors
• Uses for issuers

This violates Wikipedia's policy on verifiability (set forth here: Wikipedia policy on verifiability), which states: "Even if you are sure something is true, it must be verifiable before you can add it....The burden to demonstrate verifiability lies with the editor who adds or restores material, and it is satisfied by providing an inline citation to a reliable source that directly supports the contribution."

I can supply some citations, and I hope someone will step forward to help me remedy this problem. If there is no further action on this, in due course the remaining unsourced material will be removed. My modest qualifications for this subject, such as they are, are set forth in my user profile. Cordially,BuzzWeiser196 (talk) 11:09, 28 April 2021 (UTC)

References

Reference [3] and [11] are the same and can be cleaned up.