The coupon and maturity date are used to decide this value, and over the short term it represents the investment floor. Issue size can be helpful in determining the liquidity of an issue. The call price is usually above the par value of the security in order to compen-sate the holder for the loss of income prior to maturity. The earliest call price is most significant in evaluating a bond. Overvalued convertibles may decrease to their normal valuation without any change in the underlying stock price.
Preferred stocks have par values, and their dividends are expressed as a percentage of par value.
The short sale of stock requires that the seller is responsible for paying the dividend. The difference between the convertible's yield and the yield of the underlying stock. This is used frequently when closing out a convertible position by selling the stock first and then converting the bond. The aim is usually to enhance yield while maintaining equity position in a security. Income bonds and bonds in default trade at.