Forced Conversion

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Compulsory Convertible Debenture ...

    A type of debenture in which the whole value of the debenture ...
  2. Warrant

    A derivative security that gives the holder the right to purchase ...
  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. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
Related Articles
  1. Convertible Bonds: An Introduction
    Bonds & Fixed Income

    Convertible Bonds: An Introduction

  2. Warrants: A High-Return Investment Tool
    Options & Futures

    Warrants: A High-Return Investment Tool

  3. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

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

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

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

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

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. 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 ...
  5. Debit Spread

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

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center