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Beiträge zur betriebswirtschaftlichen Forschung

Valuation of Convertible Bonds when Investors Act Strategically

Authors: Koziol, Christian

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About this book

Convertible bonds are interest bearing securities that can be converted into stocks. Therefore, the investors' strategy is a fundamental pricing factor. It is particularly important whether a firm has debt outstanding in addition to convertible bonds and stocks, because the conversion decision results in a wealth transfer between debt and stock holders.

Christian Koziol analyzes conversion strategies and the related values of stocks and convertible bonds when firms have additional debt outstanding. For this purpose, he applies a multi period framework in the presence of both firm value and interest rate uncertainty. He shows that various conversion strategies can be optimal, which result in different values for stocks and convertible bonds, depending on the underlying conversion variant, i.e. monopolistic conversion, perfect competition, or block conversion. A comparative static analysis examines the differences between the properties of the optimal conversion strategies and between the asset values for the three conversion variants. One of the - partly surprising - results is that the convertible bond value is highest under monopolist conversion and that the value under block conversion is lower than under perfect competition.

About the authors

Dr. Christian Koziol ist wissenschaftlicher Assistent bei Prof. Dr. Dr. h.c. Wolfgang Bühler am Lehrstuhl für Finanzierung der Universität Mannheim.

Table of contents (8 chapters)

Table of contents (8 chapters)

Buy this book

eBook $79.99
price for USA in USD
  • ISBN 978-3-322-82016-7
  • Digitally watermarked, DRM-free
  • Included format: PDF
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Softcover $99.99
price for USA in USD
  • ISBN 978-3-8244-9132-2
  • Free shipping for individuals worldwide
  • Institutional customers should get in touch with their account manager
  • Covid-19 shipping restrictions
  • Usually ready to be dispatched within 3 to 5 business days, if in stock
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Bibliographic Information

Bibliographic Information
Book Title
Valuation of Convertible Bonds when Investors Act Strategically
Authors
Series Title
Beiträge zur betriebswirtschaftlichen Forschung
Series Volume
110
Copyright
2004
Publisher
Deutscher Universitätsverlag
Copyright Holder
Deutscher Universitäts-Verlag/GWV-Fachverlage GmbH, Wiesbaden
eBook ISBN
978-3-322-82016-7
DOI
10.1007/978-3-322-82016-7
Softcover ISBN
978-3-8244-9132-2
Edition Number
1
Number of Pages
XVII, 200
Topics