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Home > Convertible bond

 
A convertible bond is type of bond that can optionally be converted into shares of stock in the issuing company at some pre-announced ratio. A convertible bond will have a lower coupon rate for which the holder is compensated for by the value of the option to convert the bond into shares of stock. In addition, the bond is usually convertible into common stock at a substantial premium to its market value.

From the issuer's perspective, the key benefit of a convertible bond is a reduced interest payment. However, in exchange for the benefit of the reduced interest payment, the key disadvantage of issuing a convertible is the expected dilution to existing shareholders should the convertible bondholders convert their bonds into new shares.

For their valuation, they are often considered as a combination of an ordinary bond and a call option.

See also


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Topics: Convertible Bond, Convertible Mark...

ConvertibleConvertible can also refer to a convertible (security A convertible is an automobile built with a folding, retracting, or removable roof. The collapsible roof section is typically made from flexible canvas or vinyl, although plastic, aluminium and steel hConvertible bondA convertible bond is type of bond that can optionally be converted into shares of stock in the issuing company at some pre-announced ratio. A convertible bond will have a lower coupon rate for which the holder is compensated for by the value of the optioConvertible MarkThe convertible mark or konvertibilna marka in Bosnian is the currency of Bosnia and Herzegovina. It was established as such by the 1995 Dayton Agreement. The marka in the name refers to the Deutsche Mark, the currency to which it was pegged until 2002 at
Convertible (security)A convertible security is a security (finance) that can be converted into another security, for example a bond that under certain terms can be converted into equity. Types Contingent Convertibles Convertible Adjustable Preferred Stock Convertible Bond Con  
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