Financial Instruments Valuation

For most of the transactions nowadays, cash is no longer the only item to be paid as consideration. It is becoming more popular to structure a transaction with the involvement of various types of financial instruments, for instance, Convertible Bonds and Notes, Preference Shares, Warrants, Forwards, Call and Put Options, Embedded Derivatives, etc. Hence, an independent financial instruments valuation may be required for financial reporting of both public and private companies, according to relevant accounting standards including HKFRS/IFRS 2 and US GAAP ASC 718 and HKFRS/IFRS 9 and US GAAP ASC 326.

 

The structures of financial instruments are becoming more complex with the various clauses embedded in the terms and agreements. Based on our knowledge on different valuation methodologies and our prior experiences, AVISTA manage to customize the most appropriate business valuation model to capture the terms and clauses of the particular instruments precisely. In addition to the widely adopted binomial model and Black-Scholes model, trinomial model and Monte-Carlo model is sometimes an alternative in financial instruments valuation.