A Listed Company May Convert The Bond Financing Of A Number Of Issues Discussed

Since the Erie Railway company issued the first convertible bond in New York, 1843, convertible bonds have been developed with the raising of the market interest rate in Europe and American because of its lower interest comparing with the general bond. And the research on convertible bond developed accordingly.Convertible bonds were introduced to China in the 90'of twentieth century, and has been more and more normative since tens years of development. Companies in China pay more attention to the use of convertible bonds in these few years. Experts, scholars and the actors of the capital market did a lot of careful research on the problem of convertible bonds, made many constructive views. Yang Ruyan and Wei Gang pointed out that whether the stock nature or the debt nature should be lay particular stress on when a company use convertible bonds to raise money, and the problem of incentive compatible should be considered during the design of the issue contract. She Yunjiu made research on the transparence and reliability of the information published during the issue of the convertible bonds, the "lemon effect" led by the dissymmetry of the information and the problem of the "converse choice". Cheng Xiaofang studied how to help the investor and the debtor to measure and keep away the risk result from the issue of the convertible bonds.I used the normative method to research the problem of convertible bonds, after calculation and comparison, I make the conclusion that a modern company cannot develop without raising money in the capital market, especially the using of the finance instruments which can reduce finance risk. Currently, companies and enterprises in our country are no longer simply depend on government to help them take separate financing from the banks, they have begin to make direct financing in the developing capital market. Comparing with stocks, convertible bond has cost effectiveness, at the same time, it also face the problem of dilution effect and taxation shield effect. These problems make it more meaningful to research theproject that make convertible bonds to be a financing instrument.Convertible bonds are hybrid financial products that are part of bond and part of stock option. On a certain condition, convertible bonds are fine investment instruments, because a propriety investment portfolio scan reduces investment risk on the same income horizon and answer for a investor's especial requirement. This paper makes complement on how the financial risk contained in the issue of convertible bonds affects the price making process by the statistical method. And analyses the game relationship contained in the convertible bonds.