Abstract
As Convertible Bonds (CB) market increasingly prospers in recent years, not only has it become one of the most important financing tools for public firms, but also the popular investment target for investors. However, given the complexity of Convertible Bonds Issuance Terms, coexistence of new and old regulations, and difficulties in obtaining relevant information, investors know little about CB in terms of its investment restrictions as well as arbitrage opportunities and models. This study attempts to explore arbitrage strategies for CB¡¦s trading and investing, and to design a CB ¡§Information System¡¨ which severs as a CB database querying system, and helps enhance the efficiency of CB investment and arbitrage.
In this study, three CB related information systems were developed after analyzing CB issuance information and market price:
1. ¡§Database Querying System,¡¨ which is used to search for arbitrage restrictions and related information before engaging in CB investment and arbitrage.
2. ¡§Put Provision Instant Quoting System,¡¨ which is able to receive market quotation before exchange deadline, and to instantly calculate the rate of return in put provision.
3. ¡§Arbitrage Instant Quoting System,¡¨ like ¡§Put Provision Instant Quoting System,¡¨ can promptly calculate the rate of return in CB and considerably increase operating efficiency and the rate of return in arbitrage.
Based on the case study and empirical research, this study argues that these three information systems can practically help control the fluctuation of market price, enhance operating efficiency, and serve as an effective financial operating tool of CB arbitrage strategies. Accordingly, several conclusions of this study are presented as follows:
1. The current stock market is inefficient, so the arbitrage opportunities are still available.
2. When market is thriving and stock price exceeds CB price, there are more arbitrage opportunities for and higher rate of return in CB.
3. While investing put provision for CB often accompanies high return opportunities, investors are suggested to gingerly evaluate the finance risks of public firms beforehand, such as making use of ¡§Instant Quoting System¡¨ to operate, which is helpful to controlling market price effectively.
4. To avoid operating risks, Investors should recognize all kinds of issuance restrictions in advance.
5. Conducting ¡§Instant Quoting System¡¨ can obtain market information quickly and promote operation efficiency and the rate of return.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0730103-145835 |
| Date | 30 July 2003 |
| Creators | Huang, Feng-Cheng |
| Contributors | none, none, none |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0730103-145835 |
| Rights | restricted, Copyright information available at source archive |
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