ivestment of convertible debentures
Querist : Anonymous
can you help me to understand this information..plz
It is having two parts-
1. Convertible of Rs 60
2. Non Convertible of Rs 40
Against convertible portion of Rs 60, shares of Rs 10 each are issued. If there would be no premium then the holder would have received 6 shares for Rs 60.
Since Rs 20/is premium the holder can receive 2 shares of Rs 10/-each for Rs 20/- and the balance Rs 40/ will be adjusted in premium @Rs 20/ on each share.
By specifying conversion of Rs 60/ debenture at par means Rs 60/- debenture's value will be taken at Rs 60/ only. As such if a person is originally holding 100 debentures he will get 200 shares for the convertible portion plus he will continue to hold 100 non convertible debentures of Rs 40/ each.
Querist : Anonymous
but i do not understand da meaning of premium as used in this quetion.
and also can you help me to understand the basic terms used in investment:
1)ex-div
2)cum_div
and do this terms also apply in ordinary shares?
Cum-Dividend Price means if a person purchases at this price he will be entitled for the dividend which is distributable by the co. in the coming few days.
Ex-dividend:
Means after a certain date the holder will not be entitled for the dividend. Price is called ex-dividend price. This will be some what lower than the cum div price.
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