Pricing Of Convertible Bonds And Use

Convertible bonds are financial derivatives, which have hybrid properties of bonds and options. Because of the complexity of their value forms, the pricing of convertible bonds has been a hot research topic in the field of financial engineering. Most of research on reasonable pricing on Convertible Bond is adopted the Black-Scholes or Binomial Trees Method , focusing on the discussion of pricing model. However, lack of Short Selling Mechanism in China and under the complicated action of toward lower correction clause, the conclusion of theoretical model often diverges from real bargain price in market, difficult to find the regularity from it.The paper is started from inherent characteristic of Convertible Bond pricing , researches the value of convertible bonds by Black-Scholes model. On the basis of an empirical analysis on the characteristics of Convertible Bonds pricing,price fluctuation and risk characteristics, from the view of expected return and variety selection in the different markets, combining with the application of the arbitrage actions in Investment Portfolio, researches the strategy of inversting Convertible Bonds and puts forward exploratory thinking and method of Convertible Bond in the condition of market economy in China.