IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-14385-6_5.html
   My bibliography  Save this book chapter

An Introduction to Interest Rate Sensitivity of Convertible Bonds

In: Convertible Bond Markets

Author

Listed:
  • George A. Philips

Abstract

A convertible bond is a hybrid instrument. It has both a fixed income and an equity component. The degree by which it resembles either a straight bond or the underlying equity is largely dependent on how much the derivative is ‘in or out of the money’. Convertible bonds reflect differing sensitivities to changes in prevailing interest rates depending on their equity or straight bond content. Before analysing the characteristic behaviour of convertible bonds, we will focus exclusively on the impact of changing interest rates on straight bonds, but even at this point it needs to be noted that one is ultimately considering convertible bonds (many of which have put and call provisions) as securities with ‘embedded options’. This chapter provides a convenient place to at least outline basic bond theory and relationships which are essential for convertible bond practitioners.

Suggested Citation

  • George A. Philips, 1997. "An Introduction to Interest Rate Sensitivity of Convertible Bonds," Palgrave Macmillan Books, in: Convertible Bond Markets, chapter 5, pages 59-85, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-14385-6_5
    DOI: 10.1007/978-1-349-14385-6_5
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-14385-6_5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.