彼得羅斯公司理財(cái)cap(2)-資料下載頁(yè)
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【正文】 y subsequently does poorly, it will turn out that the conversion option finishes outofthemoney, but the firm would have been even better off selling equity when the price was high. ? But if the stock price does well, the firm is better off issuing convertible debt rather than equity. ? In an efficient financial market, convertible bonds will be neither cheaper or more expensive than other financial instruments. ? At the time of issuance, investors pay the firm for the fair value of the conversion option. 2422 Why Are Warrants and Convertibles Issued? ? Convertible bonds reduce agency costs by aligning the incentives of stockholders and bondholders. ? Convertible bonds also allow young firms to delay expensive interest costs until they can afford them. ? Support for these assertions is found in the fact that firms that issue convertible bonds are different from other firms: ? The bond ratings of firms using convertibles are lower. ? Convertibles tend to be used by smaller firms with high growth rates and more financial leverage. ? Convertibles are usually subordinated and unsecured. 2423 Conversion Policy ? Most convertible bonds are also callable. ? When the bond is called, bondholders have about 30 days to choose between: 1. Converting the bond to mon stock at the conversion ratio. 2. Surrendering the bond and receiving the call price in cash. ? From the shareholder’s perspective, the optimal call policy is to call the bond when its value is equal to the call price. ? In the real world, most firms wait to call until the bond value is substantially above the call price. Perhaps the firm is afraid of the risk of a sharp drop in stock prices during the 30day window. 2424 Quick Quiz ? Explain how convertible bonds and warrants are similar to call options. ? Explain how convertible bonds and warrants are different from call options. ? Identify possible corporation benefits from issuing convertible bonds and/or warrants.
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