| Financing decision is one of the core content of financial management, and the selection of financial vehicle is the key. Different financial vehicle affects the value of enterprise for it has different financial cost. Modem theory of capital structure and the experience of the western countries state that the reasonable financial sequence is to use the internal funds firstly, then the debts and finally the stocks. But in our country, we can find many of the listed companies would rather issue stocks than debts. This inclination is due to not only of the defect of the corporate governance, but also the shortage of the financial vehicles in the security market. This phenomenon will result in the defect of the financial structure. In a long term, listed companies get used issuing the stocks and the bonds, only few of them have attempted to utilize, the convertible bonds, which are applied extensively in the western countries. Its characters of debt and option can promote the development of the companies especially those with great potentialities, hi April 2001, CSRC release the measure to standardize the listed companies to issue the convertible bonds, witch indicate the enlargement of the financial channels in our country's security market. At present, China's capital market is not developed perfectly, in such situation, taking advantage of the convertible bonds actively can not only satisfy the listed company's requirement for the funds, reduce the financial cost, but also improve the company's ability to operate the capital. So it can be foresee that the convertible bonds will become a focus in the devdopment in China's security market. Therefore, in the view of finance, the paper discusses some issues of the convertible bonds, such as the operating thoughts,their utilization in the merger and the restructure. This paper is divided into five sections:Part on :the summary of the convertible bonds. It discusses some commonsensible questions, introduces the definition, characters, fundamental components, their development in the western countries and China.Part two: This section discusses the relation of the convertible bonds and the financial mode of the listed companies, combining with the advanced study of capital structure. Aiming at some problems in our country,this section suggest that it's important to develop the convertible bonds to build the rational financial mode. Also, itcomponents, their development in the western countries and China.Part two: This section discusses the relation of the convertible bonds and the financial mode of the listed companies, combining with the advanced study of capital structure. Aiming at some problems in our country, this section suggest that it's important to develop the convertible bonds to build the rational financial mode. Also, it emphasizes that this financial vehicle is most suitable for those companies with great potentialities.Part three: the financing decision of the convertible bonds the prevention from their risk. This section try to resolve the question of how to design the rate, the price of the convertible bonds and other fundamental components of the convertible bonds in the perspectives of optimizing the capital structure and combining the financial cost and risk rationally. At the same time, this section discusses how to keep a lookout of the convertible, bonds' risk.Part four: the utilization of the convertible bonds in the capital operation . Due to the uncertainty of the number of the stocks after issuing the convertible bonds ,they can improve the company's ability to innovate in the capital market .So this section discusses how to apply the convertible bond in merger, turning the debts into stocks in some state-owned enterprises and decrease in uncirculated state-owned stocksPart five:the problems and countermeasures of the convertible bonds in our country. It puts forward the problems existing in our country now and give some relevant suggestions. The ultimate purpose is to standardize the convertible bonds and make its devel...
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