| Abstract: | To recognize and measure the potential share value of conversion for convertible bonds more accurately, different approaches such as the straight method, the separating method, the expected value approach and the improved approach are comparatively analyzed by taking China Merchants Bank's convertible bonds as an example. There is also a focus on the improved approach that views that convertible bond issue proceeds can be separated into accrual debt value, accrual equity value and accrual option value according to the characteristics of debt, equity and hybrid securities with embedded options of convertible bonds. It is concluded that the improved approach is a more accurate evaluation method of capital structure so that it can fully reflect the economic reality of convertible bonds. |
