The following points highlight the three main types of fundamental valuation of securities in a company. The types are:- 1. Valuation of Convertible Bonds/Debentures 2. Valuation of 'Rights' 3. Valuation of Bonds. Type # 1. Valuation of Convertible Bonds/Debentures: Convertibles enjoy the benefits of both debt (initially) and equity (later). The terms of conversion will decide the pricing of these [...]
Whether it is a bond or debenture with an option of convertibility or compulsory conversion at the end of a period of time, the value of that bond or debenture is related firstly to the value of equity into which it can be converted and secondly to the value of residual non-convertible portion of the debenture instrument, which remains as [...]
In this article we will discuss about:- 1. Meaning of Security Valuation 2. Factors Influencing Security Valuation 3. Graham's Approach to Valuation of Equity 4. Securities Valuation in India. Meaning of Security Valuation: Security valuation is important to decide on the portfolio of an investor. All investment decisions are to be made on a scientific analysis of the right price [...]