Bond price calculator online financial calculator to calculate pricing / valuation of bond based on face value, coupon payment, interest rate, years and payment time. The conversion factor for each bond that is eligible for delivery is prescribed by the chicago mercantile exchange (and formerly by the chicago board of trade) for each futures contract according to a special formula.
What naturally seems to be the correct conversion factor to get the quoted price of a bond with coupon c and time to maturity m is cf = p(m,y,c)/p(n,y,006) when y=006, this conversion factor is the same one defined by hull, but otherwise they need not be the same.
Basic convertible bonds calculations stock price $3000 per share stock dividend $050 per share convertible market price $1,000 coupon rate 700% upon call, the holder can either convert the bond or redeem at the call price restrictions on calling may apply for example, notice period. The conversion ratio can also be found by taking the par value of the bond, which is generally $1,000, and dividing it by the share price a stock trading for $40 has a conversion ratio equal to $1,000 divided by $40, or 25.
Convexity of a bond – convexity in bonds measures the degree of the non-linear relationship between the price and yield of the bond as we know the bond price and the yield are inversely related ie as yield increases the price decreases however, this relation is not a straight line but is a convex curve. Bond price a bond is a debt instrument: it pays periodic interest payments based on the stated (coupon) rate and return the principal at the maturity cash flows on a bond with no embedded options are fairly certain and the price of bond equals the present value of future interest payments plus the present value of the face value (which is.
The conversion price of the convertible security is the price of the bond divided by the conversion ratio if the bonds value at the time of conversion is $950, the conversion price is calculated by dividing $950 by 5, or $190. If you convert the bond and receive 25 shares of stock at $60 per share, your convertible bonds will have a total value of $1,500 if the stock value falls to $25 instead of rising to $60, you would hold onto the bond until it matures in five years.
Conversion factor for bonds up vote 2 down vote favorite 5 hull defines the conversion factor for a bond as the quoted price the bond would have per dollar of principal on the first day of the delivery month on the assumption that the interest rate for all maturities equals 6% per annum.