Management Of Make A Price In GOME Holding's Convertible Bond

Convertible Bond is new form of derivative financial tool, it has been well developed in China market. As a form of securities, the pricing of CB is a very important issue. Currently, the pricing of CB is normally based on traditional western pricing theories.This method might cause a serious problem; the current pricing policy only calculate the measurable guidelines and factors which could influence the pricing of convertible bonds; however, for those factors which are immeasurable but could influence the value of company significantly are not taken into account. This will lead to a problem that the pricing of CB can not reflect its real value.According to the latest development of modern management theory, for instance, the views of system dynamics school and consolidation school, the system is a function of the pricing mechanism; we could analyze the immeasurable factors by using the methodology of comparison analysis and matrix analysis, which will consider market development competition forces the portfolio of business and the environment of organization.As to this issue, I have designed a two-dimension evaluation model. On one dimension, the organization can measure the factors of financial projects, which will facilitate the pricing value of this part. As for the detailed means, traditional researches on pricing have shown enough examples.The other dimension is focusing on the factors which cannot be measured, which can be solved by using matrix analysis. The fixed issues existed in multiple incidents may offer an answer. To be specific, 1) firstly, prioritize these multiple factors, screen the key factors (i.e. the core competence of an organization) out of the others. 2) Then put these factors into different groups by logics. 3) Locate each couple of factors, which makes a matrix finally? 4) Make analysis according to the matrix. Find out the key points and compare to those of the example organization, we could then have a ratio, which can be converted to get the pricing value of the immeasurable factors.When we have the measurable and immeasurable value of the organization, we could refer to the value discount brought by market guidelines. Based on the calculation of two-dimension pricing model, a reasonable vale range of origination should be available to us. The ultimate prices of organization's securities exist in this range, which is also the real value of organization.This theory is illustrated by the example of GOME Holding. It has been successfully implemented during the investment by Warburg Pincus LLC Co., Ltd. Thanks to this theory, the image of GOME Holding keep remaining positive in capital market. Meanwhile, this theory provides a valuable reference and calculation methodology for the pricing of other securities. But, this still needs us to take further researches in the future.