Part 4: Stock may convert

Part 4: Stock may convert

1. The concept can convert securities are securities holders allow it, depending on the option and in certain conditions can change it into a different stock. 2. These securities may be converted into ordinary shares ...

1. NiemChung term securities are convertible securities allow its holder, depending on the option and in certain conditions can change it into a different stock.

2. These securities may be converted into common shares is:

- Preference shares.

- Bonds.

3. Purpose of issuing and investing in convertible securities

Issuance of convertible securities to raise additional capital as at times not appropriate for the issuance of common stock. The issuance of convertible securities may also aims to increase the attractiveness for the issue, especially when markets bonds and preferred stocks are down prices.

4. Benefits of convertible bonds

* With respect to the issue: by the investors will be entitled to convert the bonds to common stock at maturity, should:

+ If the bond issuer to sell bonds at lower interest rates.

+ If the preferred shares: the issuer will sell for a high price.

When the securities are converted, the release also beneficial for removing the fixed amount to pay, and increase the number of shareholders of the company, a good indicator for the company's reputation.

* For investors:

+ Convertible securities are attractive in that they combine the safety of bonds (fixed income) with possible speculation of common stock.

+ Convertible securities may allow investors can get insurance before inflation.

However, the benefits of the conversion depends a lot on the conversion price, conversion rate, and the correlation between the price of conversion tool can with the tools that they can convert into. Those factors are not within the control of the investor.

Example 1: a bond with a par value of VND 1,000,000 if any were exchanged for 50,000 shares of common stock, the conversion price of 50,000 VND conversion ratio is 1,000,000: 50,000 co = 20 (shares).

Example 2: Assume the bond is priced at 1,045,000 VND be converted into 100 shares of common stock. Conversion price is equivalent to 1,045,000 at: 100 = 10,450 dong. That means the value of the shares must be at least 10 045 contract, the bondholders and convert it into new shares are considered equal in value. If the market price of the shares is higher than the conversion price equivalent to the conversion will result in a profit.

Actually probably not up to the stock price at which the bond holder can convert the bond to a profit.

Part 1: Summary of Stock

Part 2: Introduction to stocks

Part 3: Introduction to Bonds

Part 4: Stock may convert

Part 5: Derivatives

Part 6: Primary Market

Part 7: First Issue of securities to the public (IPO)

Section 8: Process initial issuance of securities to the public

Section 9: Underwriting