Analysis
Valuing Rivian's Convertible Bond Refinancing Decision
Overview
What this challenge is about.
Pull Rivian's most recent convertible note prospectus from EDGAR and replicate its terms (coupon, conversion ratio, call schedule, maturity). Build a binomial lattice or Black-Scholes-based valuation that splits the convert into a straight-bond floor plus a call option on equity, calibrating volatility from at-the-money RIVN listed options of comparable tenor. Compare your model price to the secondary market quote, attribute the gap to credit spread, dilution, or volatility assumptions, and recommend whether Rivian's CFO should refinance with straight debt, a new convert, or do nothing. Success means a defensible model, a clean attribution, and a recommendation with explicit break-even rate and volatility thresholds.
The Brief
What you'll do, and what you'll demonstrate.
What is the fair value of Rivian's outstanding convertible note, and should the company refinance it under current market conditions?
Earning criteria — what you'll demonstrate
- Apply derivative pricing techniques to hybrid corporate securities
- Calibrate implied volatility from listed options for use in structured debt valuation
- Evaluate financing policy trade-offs between straight debt, converts, and equity
- Integrate credit and equity views into a coherent corporate finance recommendation
Program Fit
Where this fits in your program.
Sharpens the same skills your degree expects you to demonstrate.
Skills
Skills you'll demonstrate.
Each one shows up on your verified credential.
Careers
Roles this prepares you for.
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