Analysis Of Risks And Premiums Of Convertible Bonds In Coversion Periods

The convertible bond is one of the few financial products that have been introduced in China recently. A convertible bond is a security that can be converted into common stock at the option of the investor. Hence, it is a bond with an embedded option where the option is granted to the investor. Moreover, since a convertible bond may be callable and putable, it is a complex bond because the value of the bond will depend on both how interest rates change and how changes in the market price of the stock affects the value of the option to convert to common stock.Due to the complexity of items designing of domestic convertible bonds and the lack of market environment supporting short sale system at present, what's more, all the convertible bonds have entered into the conversion period, the practical market behavior of convertible bonds is...