In 2006, Merrill Lynch became the principal underwriter of an issue of $ 5,000,000,000 convertible bond to Mogen, Inc., which was the only major convertible bond issue in history. Equity Derivatives Group of Merrill Lynch to convince management Mogen best coupon rate and conversion to Mogen and potential investors in the question. The decision to award students must understand the concept of evaluating a convertible as the sum of a conventional bond, in addition to the conversion option. The value of the conversion option and a call option requires the estimation of volatility Black-Scholes is a particularly difficult task. The housing is designed for students who already have a basic knowledge of the assessment of duties and principles for the assessment of options and works well with undergraduate, MBA, and training in public management. The instructor may choose to teach the case in a class period or two.
by
Kenneth Eades,
Alex Holsenbeck
Source: Darden School of Business
15 pages.
Release Date: October 14, 2008. Prod #: UV1054-PDF-ENG
Mogen Case Solution, Inc.
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