Talk:Convertible bond
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[edit] Implying volatility?
This article suggests that it's possible to use convertible bond prices to imply stock price volatilities. I can't find any literature on this subject, can anyone please help me? (I tried to contact the user who added the paragraph, but unfortunately he hasn't filled in his email address or doesn't want to receive emails..)
[edit] re
Imply vol is a common measure. Any derivatives of an underlying can lead to a particular implied vol whic does not necessarily agree.
All implied vol means is that, given all other parameter's observation, the volatility of the underlying MUST be a certain % (i.e. the implied vol) in order to PREVENT ARBITRAGE.
Hence, in a perfect world, the implied vol of ALL derivatives must agree based on perfect info and such implied vol = actual vol of the underlying.
However, in a real world, mis-pricing of derivatives is a fact in life. Hence when we observe the implied vol of a put option disagreeing with the implied vol of a Convertible bond, all that means is that one of the two (or both) instruments is (are) mis-priced. And its the researchers and traders' job to find out which instrument is mis-priced by how much so as to make a profit. —Preceding unsigned comment added by Cowabunka (talk • contribs) 15:44, 11 March 2008 (UTC)
[edit] League tables
I'm not sure the league tables are particularly relevant. Should they be removed? Finnancier 12:22, 3 July 2007 (UTC)
COMMENT ON THE GRAPH The graph on the convertible bond looks PLAIN WRONG but I am hestitant to remove it; my last comments were labeled as "vandalism".
1. The issue price is shown as being the bond floor with no allowance bing made for the conversion option. The Issue price is indeed shown as being below the line denoting the convertible price.
2. From 120pct of the issue price upwards there is no premium erosion, despite a diminishing yield advantage, and the impact of call features and the cost of borrow.
3. The bond floor flatlines. Intuitively, the deeper a convertible is in the money, the more beneficial it is for the credit rating of a company, and the higher the bond floor is.
4. From 70pct to zero, the convertible bond value is shown as depreciating at a sharper rate (steeper) than the share price. This is COMPLETE NONSENSE. Busted bonds generally flatten out at around 7-20pct of their nominal value.
jimgrantham@fastmail.fm
[edit] Fair use rationale for Image:CoveredBonds.jpg
Image:CoveredBonds.jpg is being used on this article. I notice the image page specifies that the image is being used under fair use but there is no explanation or rationale as to why its use in this Wikipedia article constitutes fair use. In addition to the boilerplate fair use template, you must also write out on the image description page a specific explanation or rationale for why using this image in each article is consistent with fair use.
Please go to the image description page and edit it to include a fair use rationale. Using one of the templates at Wikipedia:Fair use rationale guideline is an easy way to ensure that your image is in compliance with Wikipedia policy, but remember that you must complete the template. Do not simply insert a blank template on an image page.
If there is other fair use media, consider checking that you have specified the fair use rationale on the other images used on this page. Note that any fair use images lacking such an explanation can be deleted one week after being tagged, as described on criteria for speedy deletion. If you have any questions please ask them at the Media copyright questions page. Thank you.
BetacommandBot (talk) 21:26, 13 February 2008 (UTC)
