Alternative Product Pricing

RCPS

Concept and Characteristics

  • stock with put option and conversion option
  • similar to convertible bonds, same valuation method is used
  • difference in discount rate application
  • similar to convertible bonds in terms of promised cash flow
  • uncertainty in cash flow payout means higher risk
  • higher discount rate than junior bond is used
inform of Concept, dividend, conversion right, redemption, IPO related terms
Concept preferred stock that is converted to common stock or redeemed at par after specific time period
dividend Pre-determined dividend is paid out subject to dividend profit
conversion right conversion to common stock subject to pre-determined term. Preferred stock disappears after conversion exercise됨
redemption after pre-determine period, redeemed at par subject to dividend profit
IPO related terms IPO obligation exists within specific time range. Conversion price adjusts after IPO. Penalty exists when IPO fails

Pricing Method

inform of Pricing Method