Convertible bonds are bonds allowing the issuing party to deliver an agreed number of units of a predetermined stock at the due date rather than repay the nominal amount (reverse convertible). Seen from the opposite point of view, convertible bonds are bonds that give the buyer, in addition to the right to repayment of the nominal value and the low interest, a conversion right relating to a certain number of common stock belonging to the issuing company (convertible bond).

You first have to create the two securities classes for the bond and the stock in the R/3 System. Make sure that in the basic data of the bond class, the Nom.trading unit field, is filled. This allows you to see for what nominal amount the option in the risk object is valid. .

You create the risk object with status 9 (class addition as risk object). You must not and cannot create a financial object for this risk object. The position update is done automatically using the underlying bond. In evaluations, the system then accesses the extended class.

In the master data of the risk object, the field Security ID number in the Extended class data group is filled with the bond class already created.

The risk object hierarchy has the following structure:

You enter the data for the elementary category Complex Class in the following detail screen:

You enter the data for the elementary category Reference to ID number in the following detail screen:

You enter the data for the elementary category OTC Option in two detail screens:

You enter the data for the elementary category Stock in the following detail screen: