What is a Convertible Bond?
w How bond value varies with firm value at maturity.
0
1
2
3
0 1 2 3 4 5
Value of firm ($ million)
default
bond repaid in full
Bond value ($ thousands)
What is a Convertible Bond?
w How bond value varies with firm value at maturity.
0
1
2
3
0 1 2 3 4 5
Value of firm ($ million)
default
bond repaid in full
Bond value ($ thousands)