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Market premium %

AFM

To calculate Market premium %, should we use Market Premium/Price of convertible debenture or Market Premium/Conversion value? Market Premium/Price of convertible debenture is logical because Price of convertible debenture is a done outflow. Video Details ------------- Advanced Financial Management - AFM Security Valuation - Bonds #66. Illustration # 28 - XYZ - Basic/Diluted EPS

Durai Murugan

CA Final

★ 465

23-Jul-24 19:29

101

Answers (4)

Best Answer

Thread Starter

Durai Murugan

In Qn 29, Straight value of debenture is taken as denominator to calculate Premium over Straight value of debenture. Meanwhile to calculate Ratio of Conversion Premium, formula used is, Conversion premium per share =------------------------------- Market Price of Equity Share which is same as Conversion premium ---------------------- Conversion value Likewise, Qn 28 also solved using conversion value as denominator and in Qn 24 it is solved using both conversion value and MP of Convertible Debenture as denominator Sir, Ratio of conversion premium is premium over which figure?. Kindly help me with this.

Denominator is conversion value . In case they ask premium over MP you can compute it, otherwise do it over conversion value

Sriram Somayajula

Admin

24-Jul-24 10:57

We use straight value of debenture as denominator - ref Q 29; MP of debenture already reflects the value of the conversion option

Sriram Somayajula

Admin

23-Jul-24 19:44

Sriram Somayajula Admin

We use straight value of debenture as denominator - ref Q 29; MP of debenture already reflects the value of the conversion option

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Thread Starter

Durai Murugan

CA Final

★ 465

23-Jul-24 21:48

Sriram Somayajula Admin

Denominator is conversion value . In case they ask premium over MP you can compute it, otherwise do it over conversion value

Thankyou sir

Thread Starter

Durai Murugan

CA Final

★ 465

24-Jul-24 11:46

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