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hello Sir’
can you plz explain what is the floor value of convertible bond and what does it reflect i mean what is the purpose? why we calculate it
actually it came up in phobis (12/07) it was pure calculation but is bothering meIt is the lowest market value that the bond can have. It is calculated assuming that the holders take cash on redemption rather than convert.
Usually, bond holders will be expecting to convert because they are expecting that the shares will be worth more than the cash alternative, and so you would usually expect the actual market value to be higher than the floor value.
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