 वेश्मे लाइर खान्वीन Duwe doing advanced risk management strategies उере आज ये गई मबड़ी क्या व्रूदी सेचेंगे तु daye ajiye khambadi interusting strategy seekenge कि अव्री तु वो रहा है कि कर श्लीगा थे। ki we are going into bonds विर्च्र कि ज़ाग औरे में पर रहा आईले पाशीक कर थे। but we are having again an expoier or some linkage to the equity. how is that possible that is possible through convertible bonds when we say convertible that means it has some conversion options so what is it let's do it convertible bonds have features of equity securities since they can be conditionally converted into shares meaning we have a bond in that bond there are some conditions obviously that you can convert that bond into shares if we recall a little back then first we talked that there are additional warrants with bonds talk about the bond that will be converted into shares so you have taken a bond you have choice to have it converted to shares this make them more sensitive to company specific news and less sensitive to market economics or sentiment because now the impact of the market is generally coming but it is related to the company if the company performs well then definitely its share price will have an impact so that can be beneficial for us so we have to take their specific knowledge that what is happening in the company so in traditional bonds there is no such thing they have more impact on the market company impact is a little less because the initial impact they have to take in the rating after that its impact of market whereas in convertible bond market impact will be a little bit the company's specific performance impact will also be a lot the valuation of convertible bond must therefore carry features of bond valuation as well as equity valuation by the way they are both more dynamic than the bond valuation more equity but the convertible bond will then use a hybrid model who will discuss both the concepts the equity conversion option acts like a call option for the underlying stock so you can understand that this call option if you want to convert it into shares it will not be binding the bond holder will have a choice if he wants to convert if he does not want to convert he can mature with his bond as its normal course like call option value change based on variance variance in the underlying stock basically conversion ratio or a ratio in compact to joe stocks me movement hogi usi ka impact iski bond ki price me ho rahoga kyunke isme conversion factor involved to call option ko bhi yeh cheez impact kati nahi isi tara is convertible bonds ko bhi yeh cheez impact karengi the role of valuation valuation is a term used to describe the process of determining fair value yeh multiple time bought kar choke yeh valuation ka maksat kya hai intrinsic value nikal na ya fair value nikal na so almost every value moisten model focus on finding present value yeh har model kya kara hota ke future cash flows ki abhi value nikal do that should be value of bond that should be value of the stock to wo principle either bhi stand karega estimating cash value cash flow for the bond can be difficult ab yeh important hai kyunke agar 10 saal ka bond hai aap pata aasikte hai ki 10 saal mein yeh yeh cash flow aayenge lakin 10 saal ka convertible bond hai to yeh pata nahi hai ke bhai 30 saal convert ho jay ho sikta 8 main saal mein convert ho to it's difficult to gauge specifically yeh thoda sa amare jyasi finance walaon ke liye thoda sa challenging hai not very difficult traditional bonds me boht simple hai aap ke baas easy cash flow otay hai aap un cash flow ko discount katne you get the value yeh aap hai thoda isi zara for the other factors ko built-in karna padega the problem is that most bond have some embedded option or other conditional alternative to cash ab jab bhi bonds mein options aayenge embedded options aayenge to onko fir hame uske mein add-on karna kuch uski value ko badahabi deti hai kuch uski value ko come bhi kar deti hai bonds can be portable or callable different am ne jyostha option ki baat ki see floating hain convertible jab conversion wala factor aayega that's again a challenge to us to do the valuation traditional bond valuation as we know very simple but let's recall it involve three step estimate future expected cash flow way to determine discount trade uskali appropriate nikalne and cash flow ko state pe discount kare hain and you get the value for the bond to ish mein hame hain paaz present value nikal aayegi and that solves our purpose for the cash flow should be equal to yet unpaid coupon left before maturity o jitne unpaid coupon hone hai hai future mein jo aane hai on sab ko ye triggering karke yeh leili jaati aur aap uski base pe returns uski bond ki value nikal sekte hai and you can get expect ke hame ishe kya yield aayegi ye to simple bond ke mechanism hai hai but when it's the matter of the otherwise then relationship factor has to be there the relationship between bond value and discount rate is same as relationship with bond and yield kyunke ye aap us mein inversely linked hain interest rates low onge the lower rate the value of bond will go up because aap ka bond to fix hai achar return dera interest rate niche aage aap ka bond ki demand bhar jagi interest rates bhar jayenge aap ke bond ki value kaam hoge to ish these are inversely relationship ye bonds ka jo hai ye simple dynamic hai which we need to ye aajeg learning opportunity hai aap ki ye that bonds ka structure bhi aap thoda iss ke saad grasp kar sekte hai mara key topic convertible hi hai lakin kyunke hame simple bond ka bada hoega to hame convertible ko beta 3 kase samaj sakenge aap convertible mein jage jo hame re liye challenge part aata hai that is the feature which is the conversion convertible have embedded ability to convert into stock kya aap isko share mein move kar sekte hai so jo movement wala option hai that's equity participation feature hai ki aap ek tara se share holding mein uska part ban sakte hai to that need to be specifically taken care in this particular mode there are multiple methods of valuing convertible bond this mein bhi multiple options tarika se different aap kar sekte hai but the most famous one or the most utilized one is ke hame usko ish tara karein ke bhi keep it as a separate changa bhi hame uski baat katein ke hame usko doh parts mein banalin wo ish tara banalin ke hame kainin ke jee ek hama re paas jo element hai wo specific journal bond ka hai and then you can see to iss mein hame kya gare investor want to anticipate the impact or interest rate on stocks and how that could change over the conversion value kya kumari jo valuation hai uspe kya se impact perega to ye paraka bada important hai one of the most common and simplest valuation method for convertible bond is ke independent value of straight bond ek simple bond ki value nikal dey yaini ke usme koi impact aur cheese ka now it's a traditional bond le plus independent value of conversion option ab ye positive jo azhikti hai negative jo azhikti hai to in dona ko combine karein you will get the value of a convertible bond so ye this is the simplest way of doing it complex methods bhi hai jsme dona ko combination ke through bhi hum dekhte hai but this is the most frequently used and simplest form convertible bonds are somewhat paradoxically less risk sensitive to traditional bond ye markets mein hame impact to aata hi ye abhi hum iss me dekhte hai lakin traditional bonds se income pack thoda kum hai this is because increase risk decrease value of debt and increase value of conversion option yaini ke risk thoda bada to debt ki bo jo bond element kum ho gaya equity element betr ho gaya to apas mein offsetting kar rahe hote hai to isliye doona ka combination bada bhi demand thank you