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Optionally Convertible Debentures

The value of a debenture depends upon there fact (i) straight debenture value. (ii) conversion value and (iii) option value.

Straight Debenture Value (SDV)

Equals the discounted value of the receivable interest principal repayment, if retained as a straight debt instrument. The discount factor upon the credit rating of the debenture.

Where,
Maturity period = 8 years. Discount factor = 0,16, Interest = 0,12 payable annually of debenture = Rs 100.

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