A convertible bond arbitrage = bond + long call - short stock
long call - short stock = synthetic long put, so the equition woule be = bond + long put
when interest rate goes up, bond price comes down,equity goes down, long put makes money;
when interest rate goes down, bond price goes up, equity goes up, long put does not execute.
so, what is the best scenerios does an investor in convertible bond want to see? any particular direction on bond and stock relationship?
