Can anyone explain the formula used in this Carry Trade (convertible arbitrage)?

I'm confused by the information I have about a Carry trade (convertible arbitrage). In my notes I read the following:

B(yield) + deltaS(CF)(Rf - DY - costs) - B.Rf > 0
If CF = 1 => B.spread + deltaS(Rf - DY - costs) > 0

Could anyone explain this? I'm also confused about the meaning of CF and DY...

Thanks in advance
Asked Jun 22, 2014

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