Why would you expect that a distressed convertible would have a delta of zero?
Answer to relevant QuestionsSuppose that the price of the underlying stock for aconvertible bond is considerably higher than theconversion price. What would expect that convertiblebond’s delta to be? What is the difference between a soft put and a hard put? When using the percentage change in the credit spread as a measure of the credit spread change, what assumption is being made? When all cash flows are assumed to be discounted by a single yield, why is there no difference between the duration (sensitivity to yield), interest-rate duration (sensitivity to rates), and spread duration (sensitivity to ...Answer the below questions. (a) What is the purpose of an interest coverage ratio? (b) What does an interest coverage ratio of 1.8 × mean? (c) Why are interest coverage ratios typically computed on a pretax basis? (d) Why ...
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