A Study On Convertible Bond

Convertible bond is a bond which can be converted into shares at a certain period according to lawful procedures and prefixed terms. It can raise fund and avert risk, in many cases, it is in fact deterred raising fund by stock. Its conversion price is higher than the issuing price of new stock. This paper stars with some basic concepts and features of convertible bonds, along with description of the recent development of domestic market.The paper analyzes TASLY 's operation status and financial status in 2005,analyzes its competitiveness and the impact of the change of environment on it, forecasts its income and earning in 2006, overall capital cost, differential cash flow and earning per share, and draws the conclusion that convertible bond is the good choice for TASLY. The paper continues to analyze TASLY 's convertible bond items and evaluate the convertible bond using the option pricing model.The final conclusion of this paper is that raising fund by convertible bond suits TASLY 's financial status and is the good way, investors for convertible bond will get good return.