A Merrill Lynch note structure called a liquid yield option note (LYON) is a zero-coupon instrument that is convertible into the common stock of the issuer. The conversion ratio is fixed for the entire life of the note. If investors wish to convert to the shares of the issuer, they must exchange the LYON for the stock. As a result, the conversion price increases over time. Why?
Answer to relevant QuestionsWhen using the percentage change in the credit spread as a measure of the credit spread change, what assumption is being made? Answer the below questions. (a) If the correlation between changes in Treasury rates and changes in the credit spread is zero, what is the duration multiplier? (b) If during a time period the correlation between changes in ...What are the different approaches used to estimate the duration of high-yield corporate bonds? Answer each of the below questions. (a) Explain the meaning of funds from operation. (b) Explain the meaning of operating cash flow. (c) Explain the meaning of free operating cash flow. (d) Explain the meaning of ...In analyzing the labor situation in an industry in which a corporate issue operates, what should the credit analyst examine?
Post your question