Convertibles

AAA

DEFINITION of 'Convertibles'

Securities, usually bonds or preferred shares, that can be converted into common stock. Convertibles are most often associated with convertible bonds, which allow bond holders to convert their creditor position to that of an equity holder at an agreed upon price. Other convertible securities can include notes and preferred shares, which can possess many different traits.

INVESTOPEDIA EXPLAINS 'Convertibles'

Convertibles are ideal for investors demanding greater potential for appreciation than bonds provide, and higher income than common stocks offer. Convertible bonds, for instance, will typically offer a lower coupon than a standard bond. However, the optionality of the bond to convert it to common stock adds value for the bond holder.

RELATED TERMS
  1. Hybrid Security

    A security that combines two or more different financial instruments. ...
  2. Yield Advantage

    The relationship between convertible securities and the dividend ...
  3. Mandatory Convertible

    A type of convertible bond that has a required conversion or ...
  4. Busted Convertible Security

    A convertible security that is trading well below its conversion ...
  5. Warrant

    A derivative security that gives the holder the right to purchase ...
  6. Contingent Convertibles - CoCos

    A security similar to a traditional convertible bond in that ...
Related Articles
  1. Introduction To Convertible Preferred ...
    Bonds & Fixed Income

    Introduction To Convertible Preferred ...

  2. Convertible Bonds: An Introduction
    Bonds & Fixed Income

    Convertible Bonds: An Introduction

  3. The Mandatory Convertible: A
    Options & Futures

    The Mandatory Convertible: A "Must Have" ...

  4. Why should I keep records on my tax-exempt ...
    Taxes

    Why should I keep records on my tax-exempt ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center