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Convertible loan

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Convertible loan

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  • May 25, 2016 at 9:07 am #316974
    juve
    Participant
    • Topics: 59
    • Replies: 77
    • ☆☆

    Hello dear tutor

    My question is about convertible loan(as a complex instrument) as follows:

    In calculating the debt part,I heared that we must always assume that the loan is redeemed at par…..

    I want ro know is it correct?

    I mean if in the qusetion,examiner said that the loan is redeemed at premium(for example a 30m loan will be redeemed at 31m),should we use 31m for calculation of debt part or according to that assumption we must use 30m?

    Thanks alot

    May 30, 2016 at 9:23 am #318088
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7142
    • ☆☆☆☆☆

    Hi,

    Yes, that’s correct as we assume that the convertible debt is redeemed 100% for cash and use the par value.

    Thanks

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