Case Solution for Corning Inc.: Zero Coupon Convertible Debentures Due November 8, 2015 (A)

Complete Case details are given below :

Case Name :      Corning Inc.: Zero Coupon Convertible Debentures Due November 8, 2015 (A)
Authors :           Robert F. Bruner, Jessica Chan, Sean Carr
Source :             Darden School of Business
Case ID :           UV2487
Discipline :        Finance
Case Length :    22 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
In November 2000, a money manager needs to make a decision regarding an offering of convertible bonds by Corning. The analysis requires her to compare the insights available from standard descriptive ratios to those available from valuation analysis. This case is intended to be a student’s first exercise in analyzing convertible bonds and assumes some familiarity with option pricing theory and bond valuation. In addition, the case highlights the importance of going beyond the convertible bond calculations. The volatility of Corning stock has increased in the past year, and makes the call option more valuable, but at the same time Corning appears to be issuing converts at a time when both its share price and stock market valuations are at historic highs. Thus it is imperative that the student “have a view” on the sustainability of stock market valuations and the outlook for Corning.
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