Convertibles

Convertibles

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Fundamentals of Corporate Finance (FIN 250)

Unit 5: Hybrid Financing: Preferred Stock, Warrants and Convertibles

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of convertibles.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• Convertibles, reasons for using convertibles, conversion ratio, conversion price, conversion value, straight bond value, minimum price of convertibles and conversion premium

Detailed Microsyllabus

1. Convertibles

   1. Reasons for convertible financing.
   2. Conversion ratio and price.
   3. Conversion value.

2. Value comparisons

   1. Straight-bond value and prescribed minimum-value benchmark.
   2. Conversion premium.
   3. Explain contractual and model limitations.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 80–82.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.