Exchange Currency

convertible bond

A corporate bond, usually a junior debenture, that can be exchanged, at the option of the holder, for a specific number of shares of the company's preferred stock or common stock. Convertibility affects the performance of the bond in certain ways. First and foremost, convertible bonds tend to have lower interest rates than non-convertibles because they also accrue value as the price of the underlying stock rises. In this way, convertible bonds offer some of the benefits of both stocks and bonds. Convertibles earn interest even when the stock is trading down or sideways, but when the stock prices rise, the value of the convertible increases. Therefore, convertibles can offer protection against a decline in stock price. Because they are sold at a premium over the price of the stock, convertibles should be expected to earn that premium back in the first three or four years after purchase. In some cases, convertibles may be callable, at which point the yield will cease.

Related information about convertible bond:
  1. Convertible bond - Wikipedia, the free encyclopedia
    The convertible bond markets in the United States and Japan are of primary global importance. These two domestic markets are the largest in terms of market ...
     
  2. Convertible Bond Definition | Investopedia
    A bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.
     
  3. What is a convertible bond?
    Oct 13, 2005 ... A convertible bond is a bond issued by a corporation that, unlike a regular bond, gives the bondholder the option to trade in the bond for shares ...
     
  4. Convertible Bond Definition & Example | InvestingAnswers
    We explain the definition of Convertible Bond, provide a clear example of how it works and explain why it's an important concept in business, finance & investing.
     
  5. What are Convertible Bonds?
    The reason for this is simple: since the convertible bond contains the option to be converted into stock, the rising price of the underlying stock increases the value ...
     
  6. Convertible Bond Funds: Equity market returns with less risk?
    Sep 26, 2012 ... Convertible bond funds may be worth a look, but there are caveats. Make sure you understand all the factors before investing in a convertible ...
     
  7. Definitive List Of Barclays Capital U.S. Convertible Bond >$500MM ...
    The Barclays Capital U.S. Convertible Bond >$500MM Index represents the market of U.S. convertible bonds with outstanding issue sizes greater than $500 ...
     
  8. What is convertible bond? definition and meaning
    Definition of convertible bond: A corporate bond, usually a junior debenture, that can be exchanged, at the option of the holder, for a specific number of shares of ...