Listed Companies Convertible Bond Research

The basic economic function of the financial market is to guide the fund from the profit person to the deficit person, which raises the efficiency and makes contribution to the whole economy. The appearance of the convertible bond is just to better the function of financial market, so that realize the transformation from the profit person to the deficit person more quickly and more efficiently. For under the market economy condition, if the financial market functions normally, the diversity of financial instruments is essential. The diversity of financial instruments can satisfy the partiality of different investors , contribute to the matching of investors' risk and income, thus help to attract investors to the market The main purpose of this thesis lies in : Analyse and understand thoroughly the definition, characteristics and clause of the convertible bond. As a new innovating financial instrument, the convertible bond has the characteristics that are different from the stock and bond. It meets not only the publisher's request but also specific investor's demands. This is the content of the first part. Specifically speaking, at first it analyses the origin and development in western countries according to the logic of history; then analyses definition of convertible bond, The generally acknowledged definition of the convertible bond is that it is a bond of a kind of company, and the holder has the right to change it into ordinary stocks within fixed time limit So the convertible bond has double attributes : ①The convertible bond has the nature of creditor's rights ②The convertible bond has option nature. Then the thesis takes Shen Wanke as an example and explains the clause, then carries on the discussion to the difference between convertible bond of our country and convertible bond of foreign countries. Namely the convertible bond is a new variety in our country, which is foreign to investors. In order to attract investors, it is essential to guarantee and credit the convertible bond. Because the convertible bond is from abroad, so the development of convertible bond in the security market of our country is analysed briefly in this thesis.The convertible bond is" new " in terms of its price as a kind of new financial instrument. As to company's bond and stock this kind of financial assets, its price mainly depends on the income in the future. In other words, investors would like to pay prices for them at present, not only because of the condition of today, namely present income or advantage, but also because of some expectancy of the condition in the future.And such anticipated change will all exert an influence on their price. The convertible bond is a derivative securities on the basis of stock and bond. The determination of its price is complicated and difficult because of its specific clause stipulation. For example it can be resold can be redeemed within term of validity , and possess the characteristics of multiple option ahead of time etc. Actually it was comparatively difficult to price option ,so it is almost impossible to fix the price accurately for the convertible bond which includes the multiple option. Chapter two analyses the problems that fixes the convertible bond price in our country. Many listed companies generally use European option price at the formula, namely Black-Scholes model. Because of the multiple option nature and the American option nature contained in the transferable bond, Black-Scholes model can't be applied mechanically to fix the price of the convertible bond . Just because of these reasons, Cox, Ross and Rubinstein put forward the foundation of the algorithm, solving the pricing problem of the American option,which is significant to the development of the pricing theory of the option and option products. Chapter two has analyses binomial tree models fixing the price extremely to the theory of the transferable bond. Then carries on the positive research to our country. This is main content of chapter two.Chapter three goes on the discussion about the ex...