A bond is a debt instrument issued by entities to obtain a loan. It comes with a fixed income, usually based on a fixed interest rate. Usually, companies use bonds to raise debt finance. However, other entities, such as government organizations may also issue bonds to gather funds. Overall, a …

A stock option is a contract between a company and its investors that gives them the right to buy or sell underlying stocks at a preset price within a specific time period. Just like ordinary stocks of a company, its stock options are also available for trade on stock exchanges. …

Convertible bonds are complex financial instruments. However, the accounting treatment for convertible bonds has been simplified. The Financial Accounting Standards Board (FASB) released new guidance last month on accounting for convertible instruments and contracts in an entity’s own equity… Convertible instruments are debt or equity instruments (or features) that either …

Is knowledge of accounting important in the field of quantitative finance?  We found some interesting discussions. A poster believes that it is important: Accounting is a vital skill if you end up in a managerial position, and unless your career goal is to always be a cog in someone else’s …

International Financial Reporting Standard-2 deals with the recognition, measurement, and disclosure of Employee Stock Options. In this article, we will offer examples of accounting for Employee Stock Options. At the end of this article, we will present methods for valuing Employee Stock Options. What is an Employee Stock Option? A company …

Convertible debt is a type of loan that can be converted back to stock after some specified future date. When making an investment in convertible debt, both the issuer and investor are clear that there is a possibility of debt being converted into stock in the future. International Account Standard 32 deals with …

In a previous post we discussed how IFRS 9 will affect commodity firms through hedge accounting programs. Generally speaking, as pointed out by Thack Brown in this post, IFRS 9 will affect financial and non-financial corporates through: 1-New classification and measurement principles for financial assets, 2- New impairment models that …

As a firm with emphasis on risk management, we always advise our clients to hedge their portfolios in order to reduce the PnL volatilities. However, recently Metlife, the largest insurer in the US, was hit by a $3.2 billion loss in derivatives that were used to hedge the rising interest …

Less than a year from now, the banks will have to introduce the IFRS 9 Impairment, and it will have a substantial financial impact on them.  However, it is not just banks that will be affected by this new accounting  standard, non-financial corporations, for example commodity firms, will be impacted …