Home
.....
Philosophy
.....
F.A.Q. Bonds.
ABC.bonds
Cv. bonds
How to buy CV.
Bonds diff.
Better way
.....
Hedge Program
.....
Bds.Wk.Update
RESEARCH
.....
Cdn$ cv
US$ cv
Gold bonds
Internet
Euro bonds
.....
Cur.Vitae
.....
Comments
Terminology
BOOK
LINKS
New Page 3

                                TERMINOLOGY

 

CONVERSION RATIO:

The number of shares for which the convertible can be exchanged.            ie:  Conversion ratio = 50.50, means that one bond can be exchanged for 50.50 shares of the underlying common shares.

 

CONVERSION VALUE:

The value of the convertible bond if converted into the underlying common shares.  ie:  Conversion ratio  x  price of common shares

 

CONVERSION VALUE PREMIUM (%):

The percentage by which the price of the convertible bond exceeds the conversion value.  ie:  Price of the bond is $130 and the conversion value is 100, the premium over conversion value is 30%.

 

INVESTMENT VALUE:

The price at which the convertible bond would likely trade if it were not convertible.  In other words, the price at which a "straight" (non-convertible) bond would trade.

 

INVESTMENT VALUE PREMIUM (%):

The percentage by which the price of the convertible bond exceeds its investment value.  ie:  Price of the bond is $130 and the price of the investment value is $100, the premium over investment value is 30%.

 

CALL PRICE:

The price the convertible may be called at.  When an issue is called, holders have about 30 days to decide whether or not to convert.

 

"HARD CALL" PROTECTION:

Most convertible bonds, at issue, will be protected from being called for a period of on or more years.  "Hard call protection" means that the issue cannot be called for any reason during the specified period.

 

COUPON:

The interest payment on a bond.  Bonds are almost always issued with a par value of $1000, it is also the price at which they will be redeemed at maturity. An 8% coupon, pays $80 in interest a year.  Normally paid semi-annually.