Wednesday, May 31, 2017
Stock dividends
Stock dividends are shares received in lieu of cash. They are booked with no cost attached (received free).
Tuesday, April 18, 2017
Corporate Actions
In a normal Corporate Action when there is a cash received we book
it as an Return Of Capital and transfer the rest of the cost to new positions.
Case: Bond defaulted and company agreed to restructuring with creditors. Creditors received cash and equity shares i.e. bond to stock conversion
In the case it is a bond to stock conversion, it doesn’t make sense to transfer all the cost of the bond to the stock. The company paid cash to all the bond holders for settlement. One option is to sell the bond for the cash received (triggering a realized event) and then purchase the new securities for the amount paid for them and then mark them at market.
Case: Bond defaulted and company agreed to restructuring with creditors. Creditors received cash and equity shares i.e. bond to stock conversion
In the case it is a bond to stock conversion, it doesn’t make sense to transfer all the cost of the bond to the stock. The company paid cash to all the bond holders for settlement. One option is to sell the bond for the cash received (triggering a realized event) and then purchase the new securities for the amount paid for them and then mark them at market.
Thursday, January 19, 2017
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