t*****e
发帖数: 38 | 1 Interviewed with a major bank, OTC position.
All went well, except one question:
Assume you have a convertible bond for a firm issued from PRIVATE PLACEMENT.
Tell me how you will price it. Private placement here means that there are
no public traded securities or credit rating for the firm, and you don't
even have financial reporting from SEC Edgar.
I was totally dumbfounded, because it seemed that there was no information
at all! How could you come up something from "zero"?
Any hint? | l*******l
发帖数: 248 | 2 So you did not even ask for hint from the interview? It looks like an open
question. | p****e
发帖数: 1028 | 3 relative value pricing based on competing firm's similar security, or an
convertible index.
or simply use market standard credit premium and vol, then adjust the fi
nal price with a really conservative OAS.
basically a question this open-ended is intended to gauge your personali
ty and your response to real-world questions.
how did you respond?
PLACEMENT.
are
【在 t*****e 的大作中提到】
: Interviewed with a major bank, OTC position.
: All went well, except one question:
: Assume you have a convertible bond for a firm issued from PRIVATE PLACEMENT.
: Tell me how you will price it. Private placement here means that there are
: no public traded securities or credit rating for the firm, and you don't
: even have financial reporting from SEC Edgar.
: I was totally dumbfounded, because it seemed that there was no information
: at all! How could you come up something from "zero"?
: Any hint?
| x******a
发帖数: 6336 | 4 cft, experienced?
thank you for sharing.
PLACEMENT.
are
【在 t*****e 的大作中提到】
: Interviewed with a major bank, OTC position.
: All went well, except one question:
: Assume you have a convertible bond for a firm issued from PRIVATE PLACEMENT.
: Tell me how you will price it. Private placement here means that there are
: no public traded securities or credit rating for the firm, and you don't
: even have financial reporting from SEC Edgar.
: I was totally dumbfounded, because it seemed that there was no information
: at all! How could you come up something from "zero"?
: Any hint?
| m*********g
发帖数: 646 | 5 This is not asking you risk-neutral pricing theory. This is asking more like
economics stuff. (If I remembered correctly, CFA LV2 covers something
related to this, not exactly but related). It is actually an open question.
For example, I can go get a similar bond from industry, same industry sector
, similar cap size. And compare the P/E, leverage, bond rating, etc. And
charge for a risk premium and a liquidity premium to the private placed bond.
PLACEMENT.
are
【在 t*****e 的大作中提到】
: Interviewed with a major bank, OTC position.
: All went well, except one question:
: Assume you have a convertible bond for a firm issued from PRIVATE PLACEMENT.
: Tell me how you will price it. Private placement here means that there are
: no public traded securities or credit rating for the firm, and you don't
: even have financial reporting from SEC Edgar.
: I was totally dumbfounded, because it seemed that there was no information
: at all! How could you come up something from "zero"?
: Any hint?
| D*****a
发帖数: 2847 | 6 find firms with similar characteristics
use their bonds as a benchmark
PLACEMENT.
are
【在 t*****e 的大作中提到】
: Interviewed with a major bank, OTC position.
: All went well, except one question:
: Assume you have a convertible bond for a firm issued from PRIVATE PLACEMENT.
: Tell me how you will price it. Private placement here means that there are
: no public traded securities or credit rating for the firm, and you don't
: even have financial reporting from SEC Edgar.
: I was totally dumbfounded, because it seemed that there was no information
: at all! How could you come up something from "zero"?
: Any hint?
| t*****e
发帖数: 38 | 7 That's what I responded.
The only issue is that I don't even know the balance sheet information! How
do I know the P/E ratio, leverage ratio, blah, blah to "compare" with the
other firms and find a " similar" one.
thx | z****u
发帖数: 185 | 8 then you don't trade.
Why the fuck someone wants to trade such a stupid convertible bond? |
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