ATFXShare: the relationship between convertible bond to share price and share price, investment away from fraud

Convertible bonds can be traded after being listed, but they cannot be converted into stocks after being listed because they need to wait for the conversion period to operate. Generally, the conversion period is six months after being listed, and the conversion is divided into the stock price and the conversion price.

The Relationship between Convertible Bond to Stock Price and Stock Price?

There is no direct connection between the two, and in most cases they are independent of each other. The normal stock price refers to the market price of the listed company issuing convertible bonds, while the conversion price refers to the price paid for converting convertible corporate bonds into each share of stock. The normal stock price is based on the closing price of the day, and the conversion price is subject to the announcement of the listed company.

But if the stock is converted from ex dividend to stock price, it will also be lowered. Due to the decrease in net asset value per share after ex dividend, if the conversion price does not decrease, it will result in a decrease in the conversion value of convertible bonds.

What is the value of convertible bond to equity conversion?

Convertible Bond to Equity Value= 100*Positive stock price/The most important factor in determining whether a stock conversion can yield good returns is the stock price. The lower the conversion price, the greater the conversion value The greater the return on equity conversion;On the contrary, the higher the conversion price, the smaller the conversion value, and the lower the conversion yield.

Convertible bonds at face value(100element)Converting stocks, rather than converting them according to the market value of convertible bonds. Number of shares obtained after conversion=Number of convertible bonds ×100÷ Convert to stock price.

Convertible bonds to stocks need to be applied for within the trading time. Convertible bonds purchased on the same day can be converted into stocks on the same day. The converted shares will be credited on the next trading day and can be sold on the same day. The balance of convertible bonds that are not converted into one share during the conversion will be directly converted into cash and credited to the account.

After entering the stock conversion period, whether or not to convert depends on whether it is more profitable to directly sell the convertible bonds in hand, or whether it is more profitable to convert them into stocks and sell them. Investors can calculate by substituting the corresponding formula.