|
A technique used to appraise the relative attractiveness of a convertible security and its underlying. Break-even time is calculated by dividing the premium over conversion value by a convertible's current yield advantage over the underlying, giving the time needed for the convertible's yield advantage to 'cover' the premium. This calculation rarely gives an unequivocal indication of the relative attractiveness of a convertible and the underlying stock because it neglects the effects of so many variables. Also called Payback Period.
|
