Abstract
In this dissertation, we address two classical and closely related problems in corporate finance: the valuation of convertible bonds and the structure of optimal conversion strategies. In the literature convertible bonds are primarily considered as a portfolio of a straight bond and an American call option with the firm value as the underlying. Its arbitrage- free value is determined under the assumption of a block conversion, i.e. all convertible bond holders convert all their bonds simultaneously. Technically, the valuation problem is solved as a free boundary problem with a high contact condition where applicable.
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