Corporate Finance #16 Convertible Bonds & Warrants

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Deal Score+1


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.

What you’ll 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


Basic understanding of corporate finance concepts

Who this course is for:

  • Business students
  • Business professionals

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