Can someone explain how can I calculate the parity of this convertible bond?
I know the formula is Current price of common stock x Conversion Ratio, but it doesn't seem to be right in this picture.
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$\begingroup$ If anyone wants to play with this on Bloomberg the command is MAGNO 4 03/29/49 Corp DES $\endgroup$– nbbo2Oct 1, 2015 at 18:05
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2 Answers
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That company is probably traded on the Hungarian stock exchange in Hungarian forint. You would have to multiply the stock price by the euro/forint rate to find parity.
Note that in this case, the bond has a huge coupon (Euribor+5.5%) after the "call date", effectively forcing the call and making the bond a 4% maturing in 2016. There's no real point to modeling it any other way.
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The parity in this picture is given as the percentage of the face value. The stock price is given in HUF. I checked the stock price, It reached 16600 in september 2013. The EURHUF that time was something like 299, but we should now the exact time this picture was taken. So we have everything to calculate the parity:
$\text{Parity} = \text{Conv Ratio} \cdot \frac{\text{Stock price}}{\text{EURHUF}}:\text{Face value} =984.8326 \cdot \frac{16635}{299.03} :100000 =54,8 \%$
