A convertible bond has an embedded call option that gives bondholders the right to convert their bonds into equity at a given time for a predetermined number of shares in the issuing company. Whereas a reverse convertible bond has an embedded put option...
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A convertible bond has an embedded call option that gives bondholders the right to convert their bonds into equity at a given time for a predetermined number of shares in the issuing company. Whereas a reverse convertible bond has an embedded put option that gives the issuer the right to convert the bond's principal into shares of equity at a set date. This presentation gives an overview of convertible bond and valuation model. You can find more details at http://www.finpricing.com/lib/EqConvertible.html
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