Break, as the name implies, refers to the stock price falling below the issue price, usually on the day of listing or at the beginning. Breaking is actually more common in new shares. Details are as follows: 1. At present, there are two ways to determine the issue price of shares in China: one is the fixed price method, that is, the lead underwriter and issuer determine the issue price of new shares according to the price-earnings ratio method before issuance: the issue price of new shares = after-tax profit per share × issue price-earnings ratio. The second is the interval price-seeking method, also known as the "competitive offering" method. That is, to determine the upper and lower price of new shares, and to determine the issue price at the time of issuance according to the principle of call auction.

Second, breaking is a very short-lived phenomenon in the history of the stock market.

If the new shares fall to the bottom after breaking, then the relative risk of intervention at this time is relatively small, similar to blind spot arbitrage. Those broken and broken stocks are likely to achieve good results in the future if they do not exceed the following range. "Breaking" means that the stock price falls below the issue price, and "breaking the net" means that the stock price falls below the net asset value. For example, the issue price of China Petroleum was 16.7 yuan, which broke on April 8, 2008, and the closing price of China Petroleum was 16.02.

3. What if the convertible bonds are broken?

1. Maturity date of bonds held.

Convertible bonds are essentially bonds. After the investor holds it, the issuer needs to pay certain interest to the investor and repay the principal. Although the expected interest return is relatively low, as long as there is no bond default, investors can generally get back the principal and interest after maturity.

2, into the stock sales

Convertible bonds are based on stocks. If investors are optimistic about stocks, they can convert them into stocks and then sell them within the prescribed time limit. For example, if an investor holds a convertible bond, the price is 1 1,000 yuan, the conversion price is 20 yuan, and the positive price is 25 yuan, then the convertible bond is 1 1,000/20 = 50 shares, and the conversion value is 50 * 25 = 1, 250 yuan. Then these 50 shares can be sold at a positive share price for profit, 250 yuan.

3. Investors sell back.

If the stock is underperforming and the stock price continues to be lower than the conversion price, resulting in the failure of investors to convert shares normally, investors have the right to sell the creditor's rights back to the issuer when the resale protection clause is triggered.

4. Wait for the price of creditor's rights to rise and choose to sell.

As long as it doesn't withdraw from the market, when the market turns better, the price of convertible bonds may return to above 100 as the share price rises. Then investors can choose the timing of selling bonds.