What are convertible bonds?

Convertible bonds are a hybrid financial instrument combining debt and equity securities features, offering unique benefits and risks for both issuers and investors. Various types, features, and strategies are associated with convertible bonds, and understanding these aspects is crucial for market participants to make informed decisions.

Can a convertible bond be converted to stock?

A convertible bond pays fixed-income interest payments, but can be converted into a predetermined number of common stock shares. The conversion from the bond to stock happens at specific times during the bond's life and is usually at the discretion of the bondholder.

What are convertible securities?

Convertible securities are financial instruments, typically bonds or preferred stocks, that can be converted into a predetermined number of common shares of the issuing company. They offer investors the potential for capital appreciation through conversion into equity, though you don't necessarily have to do the conversion if you don't want to.