Analysis On The Pricing Model Of Convertible Bonds On Commercial Bank

Convertible bonds are recognized by listed companies for their unique advantages and have a place in the financial market.They are an important derivative.The domestic convertible bond market has been more than 100 years later than foreign countries,and has entered a relatively mature stage since 2006.Convertible bonds are a kind of bond with rights,and their nature is complex.Based on the relevant literature,this paper introduces the development process and current situation of the theory of domestic and foreign convertible bond pricing research.It can be found that due to its early development,the foreign theoretical system has been relatively developed.Afterwards,the relevant definitions of convertible bonds are given,and the influencing factors of the convertible bond value are analyzed.The influencing factors are divided into three aspects: bond,option and additional terms,and then analyzed successively.The general theories of convertible bond pricing include Monte Carlo simulation,B-S option pricing model,and binary tree model,which analyze the advantages and disadvantages of each model itself.This paper analyzes the development status and pricing status of commercial banks in China,as well as the problems of commercial banks’ convertible bonds.The overall development of the convertible bond market,the commercial bank convertible bond terms and distribution methods,and the pricing model itself need to be improved.A brief introduction to the case chosen in this article.The commonly used B-S option pricing model and the binary tree model are used to price the Everbright Convertible Bonds,and additional clauses are introduced at the same time.After comparison,the revised binary tree model is more accurate.Through the corresponding analysis of the typicality of Everbright Convertible Bonds,the conclusions of Everbright Convertible Bonds are extended to the entire commercial bank convertible bonds,and corresponding solutions are proposed.The significance of this paper is that,when commercial banks do not issue large-scale convertible bonds,they will reveal the issue pricing issues of commercial banks’ convertible bonds by studying the cases of China Everbright Bank.And through the improvement and comparison of the two models,the optimal model,namely the binary tree model,is obtained.The binary tree model has a case demonstration role in applicability and operability.Finally,relevant suggestions for solving the problem were put forward.