Learn about convertible bonds, warrants, and derivative securities from a certified public accountant (CPA)

What you will learn

List common convertible securities

Explain what convertible securities are

Explain what warrants and how that can be used

Describe derivative securities

Calculate warrant intrinsic value

Calculate warrant speculation premium

Calculate convertible bond conversion value

Calculate convertible bond conversion premium

Calculate convertible bond pure bond value

Description

This course will cover convertible securities. We will discuss convertible bonds, warrants, & derivative securities.

We will include many example problems, both in the format of presentations and Excel worksheet problems. The Excel worksheet presentations will include a downloadable Excel workbook with at least two tabs, one with the answer, the second with a preformatted worksheet that can be completed in a step-by-step process along with the instructional videos.

Convertible securities are securities that can be converted from one asset type into another asset type. Convertible bonds are one of the most common types of convertible securities. Convertible bonds have the option, but not the obligation, for a bondholder to convert the bond to some number of stocks.

The conversion feature in convertible securities makes them more difficult to value then other securities. For example, we can attempt to value a convertible bond by calculating the value of the related stock it could be converted into or by valuing bonds of a similar class which do not have a conversion option.

Warrants are an option to buy a set number of shares of common stock at a specified price over a given time.

Derivative securities are financial instruments whose value depends upon the value of another asset. Common examples of derivative securities are futures, forwards, options, and swaps.

English

Language

Content

Introduction

1905 Convertible Securities

1910 Warrants

1915 Derivative Securities

Practice Probs. – Convertible Bonds & Warrants

1911 Warrants Intrinsic Value & Speculation Premium

1913 Warrants Break Even Price

1916 Convertible Bond Conversion Value & Conversion Premium

1917 Convertible Bond Price & Conversion Value

1919 Convertible Bond on Exchange

1920 Convertible Bond Pure Bond Value vs Market Price Prob. 1

1921 Convertible Bond Pure Bond Value vs Market Price Prob. 2

1922 Convertible Bond Change in Price & Conversion Premium

1923 Convertible Bond Crossover Point – Conversion Value Equals Pure Bond Value


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1924 Convertible Bonds & Call Feature

1925 Convertible Bond Sale, Gain, & Rate of Return

1926 Warrant vs Stock Price % Increase

1927 Warrant Exercise & Rate of Return Calculations

1928 Exercise Warrant Gain vs Common Stock Gain

1929 Warrant Gain vs Stock Gain – Same Investment Amount

1930 Convertible Bonds & Diluted Earnings Per Share

1931 Convertible Bonds – Pure Bond value Impact vs Conversion Value Impact on Pr

1933 Convertible Bonds Pure Bond Value & Falling Stock Price

Excel Probs. – Convertible Bonds & Warrants

1911 Warrants Intrinsic Value & Speculation Premium

1913 Warrants Break Even Price

1916 Convertible Bond Conversion Value & Conversion Premium

1917 Convertible Bond Price & Conversion Value

1919 Convertible Bond on Exchange

1920 Convertible Bond Pure Bond Value vs Market Price Prob 1

1921 Convertible Bond Pure Bond Value vs Market Price Prob 2

1922 Convertible Bond Change in Price & Conversion Premium

1923 Convertible Bond Crossover Point – Conversion Value Equals Pure Bond Value

1924 Convertible Bonds & Call Feature

1925 Convertible Bond Sale, Gain, & Rate of Return

1926 Warrant vs Stock Price % Increase

1927 Warrant Exercise & Rate of Return Calculations

1928 Exercise Warrant Gain vs Common Stock Gain

1929 Warrant Gain vs Stock Gain – Same Investment Amount

1930 Convertible Bonds & Diluted Earnings Per Share

1931 Convertible Bonds Pure Bond Value Impact vs Conversion Value Impact on Pric

1933 Convertible Bonds Pure Bond Value & Falling Stock Price