Using The Binary Tree Model For Convertible Bonds Pircing Analysis

Convertible bonds as a kind of financial instruments for financing of listedcompanies in our country has a history of more than20years of development. Since ithas the issue of low threshold, at the beginning of the issue is less than the cost offinancing bonds, when the listed company financial leverage is too large or thebeginning do not want to bear larger interest cash outflows, at the same time, thefinancial situation of the company itself, profitability and capital structure does not fitto raise equity when required by the relevant constraints, choose convertible bondslisted financing became this kind of company is an ideal way of indirect financing.Can an accurate evaluation of the convertible bond value not only for distributioncompanies, also has the vital significance for investors. This paper enumerates thecurrent several common pricing model of convertible bond option value, andcompares the advantages and disadvantages of each model, and the analysis of thedegree of each model to adapt to the Chinese securities market, select binary treemodel is currently in circulation in China all of the pricing of convertible bonds isstudied.In this paper, first of all for the convertible bond value is analyzed, then illustratesthe convertible bond pricing model, for the convertible bond value is the mostimportant part of the current option value in several kinds of pricing methods areintroduced. Then starting from the actual situation of the convertible bond market inChina, is selected to circulate on the market all of the convertible bonds as a samples,collected from each convertible bonds issuing initial to March20,2012at the close ofbusiness this period of time data, using the binary tree model for convertible bondspricing analysis. Using the matlab software to programming model, and the relatedparameters calculated using excel corresponding function. Finish with a comparativeanalysis of the research results, summarizes the result of the analysis and thecorresponding countermeasures are presented.