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Maturity date = 4/15/2029
Convertible bond price/ Cost | Bond Value | EEOV | Call / Put | Amortization To and From | System Processing | |
|---|---|---|---|---|---|---|
CV purchase at premium | 110.00 | 105.00 | 5.00 | No call / put. | Amortize from 105 to 100. | Amortize premium of $5 to maturity date by amortizing cost from $110 to $105. |
110.00 | 105.00 | 5.00 | Par call resulting in worst yield. | Amortize from 105 to call date and price. | Amortize premium of $5 to call date by amortizing cost from $110 to $105 (par call price + $5 embedded equity option value). | |
110.00 | 105.00 | 5.00 | Call at 102 resulting in worst yield. | Amortize from 105 to call date and call price of 102. | Amortize premium of $3 to call date by amortizing cost from $110 to $107 (call price $102 + $5 embedded equity option value). | |
110.00 | 105.00 | 5.00 | Put at 104 resulting in best yield. | Amortize from 105 to put date and put price of 104. | Amortize premium of $1 to put date by amortizing cost from $110 to $109 (put price $104 + $5 embedded equity option value). | |
110.00 | 105.00 | 5.00 | Call and put feature - both at par.(1) Worst yield would be on call date (4/15/2020).(2) Best yield would be on maturity date. | Rule would be to use earliest of the worst call date and price or best put date and price. In this case, earliest date would be worst call date so should amortize from 105 to call date and price of 100. | Amortize premium of $5 to worst call date by amortizing cost from $110 to $105 (call price $100 + $5 embedded equity option value). | |
110.00 | 105.00 | 5.00 | Call and put feature.(1) Call at 102 on 4/15/2020 resulting in worst yield.(2) Put at 104 on 4/15/2019 resulting in best yield. | Use earliest of worst call date or best put date. Amortize from 105 to put date and price of 104. | Amortize premium of $1 to best put date by amortizing cost from $110 to $109 (put price $104 + $5 embedded equity option value). | |
110.00 | 102.00 | 8.00 | (1) Put at 104 on 4/15/2019 resulting in best yield (2) Put at 101 on 4/15/2020 resulting in second best yield. | (1) Would not amortize discount from 102 to 104 since discount on the debt instrument should not be amortized if the resulting combined amortized cost and embedded option premium would exceed the amount collectible upon cash redemption. Eagle would need to bypass the best yield in this case and do not amortize from settlement date to put date of 4/15/2019. (2) If the put option is not exercised by 4/15/2019 (best yield date), then amortize to next best yield, which would be to amortize premium from 102 to 101 to next put date of 4/15/2020. | Do not amortize discount to best put date of 4/15/2019. | |
CV purchase at premium. Clean bond value at discount. | 110.00 | 95.00 | 15.00 | With or without call / put. | Do not amortize. No amortization on discount if the resulting combined (amortized) cost of the debt instrument and embedded option premium would exceed the amount collectible upon cash redemption of bond (par in this case). | Do not amortize. |
CV purchase at par. Clean bond value at discount. | 100.00 | 95.00 | 5.00 | With or without call / put. | Do not amortize. No amortization on discount if the resulting combined (amortized) cost of the debt instrument and embedded option premium would exceed the amount collectible upon cash redemption of bond (par in this case). | Do not amortize. |
CV purchase at discount. | 90.00 | 85.00 | 5.00 | No call / put. | Amortize from 90 to 100. | Amortize discount of $10 to maturity date by amortizing cost from $90 to $100 (maturity price). |
90.00 | 85.00 | 5.00 | Have par call. Maturity date would be worst yield. | Amortize from 90 to 100 (maturity date). | Amortize discount of $10 to maturity date by amortizing cost from $90 to $100 (maturity price). | |
90.00 | 85.00 | 5.00 | Have par put. Put would be best yield. | Amortize from 90 to 100 (put date). | Amortize discount of $10 to put date by amortizing cost from $90 to $100 (put price). | |
90.00 | 85.00 | 5.00 | Call at 102. Maturity date would be worst yield. | Amortize from 90 to 100 (maturity date). | Amortize discount of $10 to maturity date by amortizing cost from $90 to $100 (maturity price). | |
90.00 | 85.00 | 5.00 | Put at 104. Put date would be best yield. | Amortize from 90 to 104 (put date and price). Resulting amortized cost, which includes the embedded option premium = 104 (cash redemption of bond on put date). | Amortize discount of $14 to put date by amortizing cost from $90 to $104 (put price). |