Analysis of Investment and Financing Effect of Convertible Bond Market Based on Risk Utility Perspective

Abstract

Convertible bond is a kind of financial instrument based on bonds. Investors can convert convertible bonds held by them into issuer's shares at the pre-agreed conversion price within the conversion period. Convertible bonds provide a flexible financing method for enterprises, which makes the capital structure of enterprises have a certain degree of flexibility. The special nature of convertible bonds makes convertible bond financing far superior to equity financing and bond financing for some enterprises in special market environment and investment environment. From the perspective of enterprise valuation, in the modern financial system, where the influence of capital structure has been studied more and more deeply, how to measure and divide the connotation of convertible bonds' equity and debt will have a more complex impact on enterprise valuation. Based on the perspective of risk utility, this paper studies convertible bonds from the development and current situation of convertible bonds financing, and analyzes the investment and financing effects of convertible bonds market.