Convertible Bonds: Markets, Motives, and Traditional Valuation

Before we analyze convertible bonds in detail, it is useful to first gain an overview of the convertible bond market and the corresponding market usance. Therefore, the main focus of this section is to consider both the development of the German convertible bond market and the prevalent characteristics of the traded bonds. For this purpose, we consider 61 convertible bonds which were issued in the German convertible bond market in the period from 1952 to 2000. The data set consists of all those convertible bonds which are contained in the “Mannheimer Anleihedatenbank”1 which is part of the Deutsche Finanz-Datenbank.