The Study Of Convertible Bond Risk Control

Convertible bond possesses three basic properties of bond, options and convertibility. It has the function of optimizing capital structure, but this function is not made full use of by Chinese listed company issuing Convertible bond, which, in a sense, affects optimization of capital structure of listed company .Based on the basic theories of convertible bond optimizing capital structure, the thesis analyzes systematically introduces the premise of convertible bond optimizing capital structure. This thesis takes risk into consideration and compares convertible bond financing with stock financing and pure bond financing so as to demonstrate the internal causes of convertible bond optimizing enterprise capital structure. The thesis proves that under the same condition earnings of per stock gained by issuing convertible bond are more than those of stock financing, and than those of pure bond financing as well. Besides a large amount of financial expenses can be saved, more profit can be gained from issuing convertible bond instead of cutting down stocks. Obviously the financial risk of convertible bond financing is much lower than that of bonds financing, but a little higher than that of stock financing. Based on theoretical analysis the thesis makes substantial analysis of evidence on the above conclusion, and establish the regression model between the change of stock price and issue scale, overflowing price, and face interest of convertible bond.