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To: Sun Tzu who wrote (10)	9/1/1998 11:38:00 AM
From: Just My Opinion	Read Replies (1) \| Respond to of 10656

try this: e-analytics.com the article..hope it helps. Convertible Bonds This is part of a larger bond and interest rate site provided by Equity Analytics, Ltd. A convertible bond is one which is convertible into the company's common stock. The conversion option to the bond is exerciseable when and if the investor wants to do it. The conversion ratio varies from bond to bond. The terms of conversion are set forth in the indenture. The exact number of shares or the method of determining how many shares the bond is converted into is printed in the indenture. Many times the indenture will tell you how many shares of stock the bond is convertible into. For instance, it might say that it is convertible into 20 shares. Therefore, the conversion ratio is 20:1. Unfortunately, it's not always that easy. For instance, the indenture might state the conversion price. The conversion price is the price per share that the company is willing to trade their shares of stock for the bond. For example, if the indenture states that the conversion price is $50 per share, the bond is convertible into 20 shares of stock. You divide the par value (usually $1,000 for corporate bonds) by the conversion price. Occasionally, the indenture might state that the conversion ratio will change through the years. For example, the conversion price might be $50 for the first five years, $55 for the next five years, and so forth. There are also anti-dilutive features to the conversion feature. If the stock were to split 2 for 1, and the conversion ratio was 20 to 1 prior to the split, after the split, the conversion ratio would be 40 to 1. A stock dividend would also have the same effect. A stock split would also reduce the conversion price. Because convertible bonds have a little something extra, the right to convert to common stock, that little something extra costs the bond holder. The bond will usually carry a slightly lower interest rate. If the stock price rises, the bond price will also rise. Since most convertible bonds are also callable, the company can force the bond holders to convert the bonds to common stock by calling the bonds. This is known as 'Forced Conversion'. When a bond is converted to common stock, the corporate debt is reduced. What was formerly debt has now been converted to equity. Of course, converting debt (bonds) into stock (equity) has the effect of diluting the equity. The company didn't get any larger with the additional stock. But each stockholder's piece of the pie got smaller. If the company's stock declines to a price which makes the convertible feature of the bond worthless, as long as the company is solvent, the bond will trade based on its yield - like any other bond. There is a price level to which a bond will fall and fall no further as long as the company can pay its interest and the principal upon maturity. One other term to know is 'Parity'. If the $1,000 convertible bond is convertible into 50 shares of stock, the parity price of the stock is $20. If the stock moves up to $25, for the stock and bonds to be at parity, the bonds would have to be trading at $1,250.

To: Sun Tzu who wrote (10)	9/1/1998 1:42:00 PM
From: WhipsawMcGraw	Respond to of 10656

Convertable bonds give you the best of both worlds. The most important aspect is the company. The company must be credit worthy for such an investment. Convertable bonds will typically pay 7-10% interest over the course of the loan period. The bond however can be converted into stock rather than interest payments. This usually has a time line for converting but you can actually have a conversion price at 10, the stock price at 15 and get interest payments at the same time. These bonds also have mandatory conversions at certain prices that the company can automatically convert you. This is a great way to get a credit worthy interest payment with the possibility of owning some of the stock.

To: Sun Tzu who wrote (10)	9/2/1998 2:50:00 PM
From: Sun Tzu	Read Replies (3) \| Respond to of 10656

Topic for Discussion -- In muddy waters are great for catching fish On one account 40% of the world is now in depression. What sets depression apart from recession is not its magnitude but its cause. Recessions are caused by excess inventory (i.e excess quantity supplied) whereas depressions are caused by excess capacity (i.e a shift in the whole supply curve). Needless to say that to get out of a recession, you cut back on your quantity supply and wait for people to buy out your inventory. But to get rid of a depression, enough companies have to disappear off the map for things to improve and this is a much harder process. With this in mind, here is the thesis I'd like to discuss: Which companies are going to disappear, which ones will be bought out, and which ones will survive to be the kings of the new up turn? My personal feeling is that Semiconductor, Computer prepheral, board makers (e.g Sanmina), Textile (and clothing manufacturers), Oil producers, oil service companies, and base metal companies are all prime candidates of these changes (add yours to the list). Among these the more the excesses, the more the opportunity. So for example, there are about 26 memory producing companies. My estimate is that the world needs only 4 of them. Will Micron Tech be among the survivors, will it be bought out, or will it disappear off the market? Please don't turn this into a Micron Sucks Vs. Micron Rules debate. I'd like to know why a company will survive (possible reason great finances) or be bought out (possible reason great distribution channel and small size) or that it even is a candidate for this debate. Another good debate area is the oil drillers and oil service companies. Anyone cares to comment on GLM, SLB, BJS, ... in the above context. On the base metals side I only know of PD and AR both of whom seem too big to fall and too big to be bought out. Any other ideas? Let the games begin! Sun Tzu Psst psst, This forum is now the number one "HotSubject" forum :) pass the word.