Value the convertible bonds' equity and debt with option methods

In this paper, we have show an improved method for bifurcating a convertible bond issue into its debt and equity components. This method relies on the assumptions and theory associated with options to value the debt and equity portions of a convertible bond at the issue date and over the bond's life. With an analysis of a experimental date base, we conformed our idea by calculating a virtual company's convertible bonds' equity and debt. For more verification of this method, a number of real companies' data is necessary. In order to decrease computational difficulty, no complex meth required here.