Hindsight bias.

This study aims to value the convertible bonds listed on the Stock Exchange of Singapore, using the Synthetic Approach. This study was motivated by the fact that little research has been done in this area, and the growing popularity of issuing convertible bonds as a means of raising capital. The sam...

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Main Authors: Chia, Ti Yu., Lin, Hui Fern., Yong, Min Swee.
其他作者: Nanyang Business School
格式: Final Year Project
語言:English
出版: 2013
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在線閱讀:http://hdl.handle.net/10356/51767
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機構: Nanyang Technological University
語言: English
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spelling sg-ntu-dr.10356-517672023-05-19T06:24:04Z Hindsight bias. Chia, Ti Yu. Lin, Hui Fern. Yong, Min Swee. Nanyang Business School DRNTU::Business::Accounting This study aims to value the convertible bonds listed on the Stock Exchange of Singapore, using the Synthetic Approach. This study was motivated by the fact that little research has been done in this area, and the growing popularity of issuing convertible bonds as a means of raising capital. The sample for this study was drawn from the period starting January 1980 to October 1995. The sample consisted o f l l issues ofSingapore convertible bonds and 7 issues of Malaysia convertible bonds. Using the Synthetic Approach, the convertible bonds were valued separately as a straight bond and a call option on the shares of the issuing companies. The values of the straight bonds were obtained by discounting the future coupons and maturity payment, and the option part was calculated using the Black-Scholes Option Pricing Model. Other tests on the attractiveness of the convertible bonds were also conducted in this study. The results of this project revealed that the model was better at pricing convertible bonds issued by Singapore companies than Malaysia companies. In general, the model underprices Singapore issues and overprices Malaysia issues of convertible bonds. This is derived from the fact that the average percentage difference for the Singapore sample is only -4.73% as compared to 13.55% for the Malaysia sample. Additional tests involving dividends were conducted and results showed that the impact of dividends on the model was negligible as the maximum difference between models including and excluding dividends is only a mere 0.05%. In conclusion, the model is easy to apply and yet able to achieve results similar to other pricing models previously used. ACCOUNTANCY 2013-04-11T03:06:12Z 2013-04-11T03:06:12Z 1996 1996 Final Year Project (FYP) http://hdl.handle.net/10356/51767 en Nanyang Technological University 76 p. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic DRNTU::Business::Accounting
spellingShingle DRNTU::Business::Accounting
Chia, Ti Yu.
Lin, Hui Fern.
Yong, Min Swee.
Hindsight bias.
description This study aims to value the convertible bonds listed on the Stock Exchange of Singapore, using the Synthetic Approach. This study was motivated by the fact that little research has been done in this area, and the growing popularity of issuing convertible bonds as a means of raising capital. The sample for this study was drawn from the period starting January 1980 to October 1995. The sample consisted o f l l issues ofSingapore convertible bonds and 7 issues of Malaysia convertible bonds. Using the Synthetic Approach, the convertible bonds were valued separately as a straight bond and a call option on the shares of the issuing companies. The values of the straight bonds were obtained by discounting the future coupons and maturity payment, and the option part was calculated using the Black-Scholes Option Pricing Model. Other tests on the attractiveness of the convertible bonds were also conducted in this study. The results of this project revealed that the model was better at pricing convertible bonds issued by Singapore companies than Malaysia companies. In general, the model underprices Singapore issues and overprices Malaysia issues of convertible bonds. This is derived from the fact that the average percentage difference for the Singapore sample is only -4.73% as compared to 13.55% for the Malaysia sample. Additional tests involving dividends were conducted and results showed that the impact of dividends on the model was negligible as the maximum difference between models including and excluding dividends is only a mere 0.05%. In conclusion, the model is easy to apply and yet able to achieve results similar to other pricing models previously used.
author2 Nanyang Business School
author_facet Nanyang Business School
Chia, Ti Yu.
Lin, Hui Fern.
Yong, Min Swee.
format Final Year Project
author Chia, Ti Yu.
Lin, Hui Fern.
Yong, Min Swee.
author_sort Chia, Ti Yu.
title Hindsight bias.
title_short Hindsight bias.
title_full Hindsight bias.
title_fullStr Hindsight bias.
title_full_unstemmed Hindsight bias.
title_sort hindsight bias.
publishDate 2013
url http://hdl.handle.net/10356/51767
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