Forced Conversion


DEFINITION of 'Forced Conversion'

The occurrence of an issuer of a convertible security exercising the right to call the issue, forcing investors to convert their securities into the predetermined number of shares.

BREAKING DOWN 'Forced Conversion'

An issuer will be interested in forcing a conversion if interest rates decline significantly, or if the price of the security underlying the convertible is above the conversion price. Forced conversions are generally detrimental to the holders of the security.

  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  3. Conversion

    The exchange of a convertible type of asset into another type ...
  4. Convertible Bond

    A bond that can be converted into a predetermined amount of the ...
  5. Convertible Debenture

    A type of loan issued by a company that can be converted into ...
  6. Warrant

    A derivative security that gives the holder the right to purchase ...
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