This thesis deals with the valuation of domestic convertible bonds. The purpose of the study is to provide the issuers and investors of convertible bonds with the appropriate evaluation methods. In this thesis, we produce three evaluation models using option pricing model and compare the theoretical price from the models with issuing price (market price).
As a result, the issuing price of domestic convertible bonds is underpriced. Since the secondary market in Korea is not well developed, the issuers of domestic convertible bonds provide the investors of that with liquidity premium.
