Series 7 Exam Prep Convertible Bonds & Convertible Preferred Stock.

[@ashtong.883]

Passed my SIE fast with your help, trying for my Series 7 now. Thank you for putting all this out there. It truly helped me more than any study book.

[@Series7Guru]

Always very gratifying when my content is helpful to test takers.

[@ashtong.883]

@@Series7Guru Hey Dean, I’m struggling with the Munis/ Gov Agencies section in my Kaplan journey… (it’s just not something I deal with at my job) I see you have a class open on Thursday for bonds. Think this would help?

[@bennettbullock4481]

Thank you for this Dean - these videos are tremendously helpful!

[@Series7Guru]

Glad you are finding them helpful.

[@sherillemarquez6407]

Thank you so much, Dean!! This was golden (again). I test 1st week of Jan and God willing I pass we’re going to Vegas that weekend. Would be awesome to buy you a drink and thank you in person!

[@Series7Guru]

Sounds good. The gift or gratuity rule does not apply to KZbin creators. lol

[@RC-sy2lq]

Thank you!!

[@EthanAlessi-db2ho]

I am reading unit 5 "Municipal Securities" i am on the part about how Muni bonds are traded and i am seeing things about settlement date T+2, how does the whole 30 day month 360 day year vs 365 day accrue interest play into the new rule of everything switching over to T+1? does it seem likely that they would take things out like you mentioned in your previous video or count them in the 10 questions that dont count on the exam as a result of the new legislation having just being taken into effect in may? what are your thoughts/opinions

[@Series7Guru]

It is now T + 1 but that does not change 30 day months or calculation of accrued interest. It was and is calculated from last interest payment date up to but not including settlement date

[@amandahowland8277]

Hi Dean! Thanks again for another great video. I test on the 13th after failing by 2 points the first time. Your videos have been super helpful! One question I have regarding arbitrage is that you said that bonds should be trading at a premium above parity, and if they aren’t then there is an arbitrage opportunity. However on pass perfect it says “if the common stock is trading in the market a price above parity, then an arbitrage opportunity exists” which to me sounds like the opposite of what you said. I could totally just be reading it wrong because my brain is kinda mush today but can you explain the difference here? Want to make sure I have clarity since this seems to be a question that I will for sure get!

[@Series7Guru]

No. That is just the same thing for the opposite direction. Remember of the bond is different than parity of the stock.

[@gayletripp9185]

No shame in the game bc hey, I need clarity on the parity. So if the stock is at 52 a share and the bond is 1,250, what was the final answer in the better deal? I got lost in the arbitrage and didn’t know what the investor should do?

[@gayletripp9185]

Is it super simple in that the stock is better at 1300 in value than the bond at 1250

[@Series7Guru]

1,250 is parity of the bond. 52 is parity of the stock with the bond at 1,300

[@njperuviankid]

Thank you Dean

[@Series7Guru]

De nada

[@Caligula.IO_]

Would you consider moving your face from the top right corner (which is likely to block part of the question) to the bottom right corner (where there is rarely, if ever, any text)?

[@Series7Guru]

Been doing so. This is an older lecture.

[@ignatiushorstmann2526]

Dean, amazing videos, but if possible could you please move your self video out of the top right hand side? its difficult to see the numbers sometimes which can make it slightly more difficult to work along with.

[@Series7Guru]

Have done so. One of my earlier videos where didn't realize I was blocking content.

[@EthanAlessi-db2ho]

hi dean, is the "arbitrage opportunity" testable? is the point of it Posibility testable or are you just informing for real world

[@Series7Guru]

Yes. It is testable but low probability

[@marinagonzales8252]

Hi Dean, I failed the 7 last month by 3 questions. Went in pretty confident but was surprised by some of these conversion questions showing the conversion rate as "14:1" or "5:1". Really threw me off during the test as I do not recall Kaplan having practice questions in this form. Can you explain to me what to do with an actual ratio when given in a question? I may be overthinking this.... thank you

[@Series7Guru]

Damn. Those close misses are exasperating. Not knowledge deficit. Some other variable. Think there are easier points to pick up but let me give you the most difficult version of this you could encounter. A convertible preferred stock has a conversion ratio of 5:1. The company pays a 10% stock dividend. What is the new or adjusted conversion price? Remember all conversion terms are based on par. 5 shares of common for 1 share of preferred means a conversion price of $20 (Par100÷5 conversion ratio). Next we multiply old conversion ratio by 10%. 5 × 10%=.5. So new conversion ratio is 5.5. I want to be able to convert into the same proportion of shares as before the 10% stock dividend. Existing common stockholders are getting 10% more so I want to be able convert into 10% more. Last step is divide par by the new conversion ratio to get new conversion price. Pat 100÷5.5 nee conversion ratio =18.18.new or adjusted conversion price. Lot of work for one point and would only be on a draw from hell. Would prefer would were operating from abundance and could guess b. Assign to this one universe and make it up elsewhere. Remember always more shares at a lower price

[@Series7Guru]

Here is one for you to try A convertible bond has 20:1 conversion ratio. Hiw many shares can each bond be converted into? What is the conversion price?

[@kevinwang3379]

@@Series7Guru 20 shares each bond can convert and $50 conversion price?

[@Series7Guru]

@@kevinwang3379 correct

[@alishadhs4]

i was 4 questions off last friday so i feel your pain! i got a 69%. retaking sept 20. how did you do on your retake??

[@ITYABOYKJ]

thank you

[@Series7Guru]

De nada

[@AdamPovis]

This is going to eff me up on my series 7 I think hahaha

[@Series7Guru]

High probability that you will have to calculate parity of the common

[@kelseyg9637]

thank you!

[@Series7Guru]

You're welcome! Funny that my favorite lectures like this one are not as popular as I think they should be. Lol. Glad you liked it.

[@Nat-Nat87]

I watched this and I’m still lost 😭

[@Series7Guru]

Have you done any practice questions like this kzbin.info/www/bejne/oqScqWiIdtaEebc Have you watched your vendors video on same? Have you read the section in your book on convertibles? Need to articulate what part you don't get. Hard to help with i don't get it. You don't get the conversion ratio? Calculating parity of the bond? Calculating parity of the stock?

[@Nat-Nat87]

@@Series7Guru I actually just started studying for the 7 using passperfect just passed my SIE Thursday

[@Nat-Nat87]

@@Series7Guru I don’t understand knowing which is best to execute. Whether to convert or keep or buy the bond

[@Series7Guru]

@@Nat-Nat87 if the converted shares are worth more than par at maturity you convert. If the par is worth more than the converted shares you do not.

[@milizhu3626]

Have this question in 65 exam

[@Series7Guru]

Thanks for the confirmation.