Afm jonlen desa o6

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ppt on Debenture, warrants and VC

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Afm jonlen desa o6

  1. 1. DEBENTURES, WARRANTS & VENTURE CAPITAL JONLEN J.R.DESA M.COM-1 R.M/COM-11-06
  2. 2.  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
  3. 3.  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.
  4. 4.  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.
  5. 5.  Conversion ValueConversion 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.
  6. 6. A Warrant is a derivative security thatgives the holder the right to purchasesecurities (usually equity) from the issuerat a specific price within a certain timeframe.Warrants are often included in a newdebt issue.
  7. 7. 1) Exercise Price2) Exercise Ratio3) Expiration Date4) Detachability5) Right
  8. 8. 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- Warrants Theoretical Value Warrant’s Theoretical Value
  9. 9.  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.
  10. 10. Equity ParticipationLong Term InvestmentParticipation in ManagementHigh Risk Involved
  11. 11.  Executive Summary Background of the Venture The Product or the Service Market Analysis Marketing The management team Financial Projections
  12. 12. 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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