afm jonlen desa o6
DESCRIPTION
ppt on Debenture, warrants and VCTRANSCRIPT
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DEBENTURES, WARRANTS & VENTURE CAPITAL
JONLEN J.R.DESAM.COM-1
R.M/COM-11-06
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Meaning of Convertible Debentures Features of Convertible Debentures Valuation of Convertible Debentures Meaning of Warrants Features of Warrants Valuation of Warrants Capital Venture- Meaning & Features Business Plan Elements
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A Convertible Debenture is a debenture that can be changed into a specified number of equity shares at the option of the owner.
Definition
Debenture which can be converted into stock at the option of the holder at a specified date in the future. Because the buyer has the ability to convert the debenture into stock under certain circumstances, the seller is able to borrow at a lower cost than if the convertibility feature was not present.
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1.CONVERSION RATIO-It is the no.of shares that an investor can receive when he exchanges his convertible debenture.
Conversion Ratio= Par value of Convertible Deb
Conversion Price 2.CONVERSION PRICE- It is the price
paid for the ordinary share at the time of conversion.
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Conversion Value Conversion Value=Conversion Ratio x Sh
price
Valuation of Non-Convertible Debentures
It is also known as Straight Debenture. Value of NCD=Sum of the present value
of future interest payments & principal redemption at the required rate of return.
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A Warrant is a derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.
Warrants are often included in a new debt issue.
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1) Exercise Price2) Exercise Ratio3) Expiration Date4) Detachability5) Right
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1) Theoretical Value of a warrant can be found out if we know the ordinary share’s market price & warrant’s exercise price.
Theoretical Value= (Sh Price- Exercise Price)* Exercise Ratio.
2) Premium Value
It is the difference between the market value & the theoretical value of the warrant.
Premium=Warrant’s Market Value- Warrant's Theoretical Value
Warrant’s Theoretical Value
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VC is an imp innovation of the 20th Century. Synonym of “Risk Capital”-Long term risk
Capt. It is considered as “ the early stage
financing of new & young enterprises to grow rapidly.
VC plays an imp role to finance SSE’s & high technology & risky capital.
VCs operate in Pub & Pvt Sectors. VC supports risky projects or ventures.
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Equity ParticipationLong Term InvestmentParticipation in ManagementHigh Risk Involved
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Executive Summary Background of the Venture The Product or the Service Market Analysis Marketing The management team Financial Projections
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WEBSITES1. www.google.com2. www.investorwords.com3. www.investopidia.com4. En Wikipedia
REFRENCES Financial Management-I.M.Pandey Financial Management-M.Y.Khan, P.K.
Jain Business Finance-N.G. KALE
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