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Technology Stocks : Wind River going up, up, up!
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To: mac who wrote (2093)9/21/1997 1:30:00 PM
From: Snowshoe   of 10309
 
mac, here is a simple example showing how convertible arbitrage works:
altinvest.com

While Mark is correct in pointing out that this strategy exists, I think its a stretch for him to assert that the bonds "ensure" that this strategy will be used. Here are some questions that come to mind...

1) What is the intent of the bond purchasers? Would they necessarily want to lock themselves out of a potentially much larger gain?

2) Is WIND's bond deal really structured in a way that favors arbitrage? Or is this strategy more attractive for bonds with a higher interest rate?

3) Are there historical examples that prove that convertible bonds always "ensure" the stock price effect that Mark asserts?
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