Yield Advantage

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DEFINITION of 'Yield Advantage'

The relationship between convertible securities and the dividend yield of the common stock of the same issuing corporation. The yield advantage is the additional amount of return an investor can expect to earn if a convertible security is purchased instead of the common stock.

INVESTOPEDIA EXPLAINS 'Yield Advantage'

The yield advantage is calculated by subtracting the dividend yield of common stock from the rate of return on a convertible security. Determining this calculation helps investors decide if it is advantageous to retain the convertible security or exchange it for common stock.

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  3. Busted Convertible Security

    A convertible security that is trading well below its conversion ...
  4. Common Stock

    A security that represents ownership in a corporation. Holders ...
  5. Current Yield

    Annual income (interest or dividends) divided by the current ...
  6. Discounted Future Earnings

    A method of valuation to estimate the value of a firm.
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