The core of the market is the well
known convertible bond structure.
The bond gives its owners the right
to surrender the debt in return for a
specified number (conversion
ratio) of shares in the issuing company,
whose value is known as
parity. The conversion price is the
underlying share price above
which the parity value exceeds the
face value of the debt.
check for further detail:
www3.sungard.com/monis/menus/documents/whitepapers/article-fow-0101.pdf
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