China Convertible Bond Pricing Analysis

As China's capital market has been developing in a rather fast pace, more and more people are paying attention to the Convertible Bond, a kind of combined financial derivatives with the properties of bond and stock. So its pricing theory research lays important effects on stock investment. On the base of reviewing two often-used pricing theories, that is, Black-Scholes Model and the Binomial Model, the author uses the latter one to estimate several Convertible Bonds'value in the capital market of China. The conclusion is that the Convertible Bonds in the capital market of China are commonly undervalued. The investors need correct view on the value of those bonds.