The Attributes Of Convertible Bonds And The Strategies Of Investing And Financing

The convertible bond is one of the most important derivatives in the financial market in China, and it's a kind of bond which can be converted into a particular sum of stocks in a given period after issuing. The convertible bonds give investors some options, which enable them not only to prefer to hold the bonds to the maturity to obtain the capital and the interests, but also to choose to convert the bonds to the stocks in the promissory time at the promissory price.With the modern economy developping fast, and the innovation of financial products changing quickly, the need for finacial derivatives in the capital market is becoming more and more strong. Now, the Chinese capital market is in the period of new style and transition, and there is still need perfecting its structure and enriching its financial products. However, the research about the financial derivatives and modern financial engineering is yet at the beginning in China. So, the investigation of the convertible bond which is known as a modern financial derivative is of great academic and practical sense.Synoptically speaking, the internal and external research of the convertible bonds focused on the facts such as pricing and deciding of provisions. As the convertible bonds have complicated attribute and structure, and different convertible bond is priced respectively, there hasn't been a unitive and accurate result of the pricing of convertible bonds. Comparing to those primary quantitative study, this whole paper emphasized on the qualitative analysis. First, the value consititution and the double attributes of convertible bonds were introduced , and then the advanteges and disadvanteges of the convertible bonds for both parts between investing and financing were elaverated, followed with the note of the influence of the attributes of convertible bonds on strategies of investing and financing. At last, there was an empirical study about the market of convertible bonds.The convertible bonds representing the attribute of stocks or bonds is linked with the enviorenment of capital market, and either attribute must stand out in different period. This whole paper is related with Chinese bond market and stock market, the years of 2004 and 2006 were chosen as the representatives of the "bull market" and the "bear market" in China, and in the following was the study of the correlation between the markets of convertible bonds and bonds, convertible bonds and stocks by the method of economitrics, which then identified that the representation of the attribute of convertible bonds is influenced with the capital market, and in the end some suggestions on the decision on strategies of investing and financing were offered.