Home     About Us    Contact Us     Contribute     Privacy
Investing
Stocks
Bonds
Mutual Funds
Biz
Credit
Career
College
Economics
Tax
More
 
 
Marketplace
Related Articles
Related Definitions
Related Categories
Tip of the Day

Tip of the Day Consider Community College or Online College For Your First Year or Two

Consider Community College or Online College For Your First Year or Two - If you are finding you need the education but don't have the funds, or want to take...

read entire tip

Recently Added
Other Great Sites
 

Convertible Bond Trading

Convertible bonds are issued by corporations and they can be converted into a (predetermined) amount of the company's equity at particular times during the life of the bond (usually 25-30 ears in term). The bondholder determines when the bond is to be converted, not the corporation. This type of bond gives the bondholder the right to acquire the issuer's common stock directly from the issuer rather than on the open market. The bond indenture will detail the terms under which this exchange can occur.

Convertible bonds are considered to be a hybrid security, that is, they have aspects of both bonds and stocks. Convertible bonds are often categorized as subordinated debt, and therefore are a bit more risky than unsubordinated debt. If the issuer goes through rough financial waters, subordinated debt holders fall behind unsubordinated debt holders concerning principal repayment.

When it comes to trading convertible bonds, remember that the word trading more accurately means "buying and selling." Firstly, convertible bonds are considered to be a safer investment compared to stocks, but they can still provide stock-like returns. Secondly, they are steadier and less volatile than stocks. For instance, the value of a convertible bond can only fall to a price where the yield would be the same as that of a non-convertible bond of the same terms, which offers protection in a bear market. Convertible bonds also allow the investor to participate in the profits, too, if a stock goes higher.

Convertible bonds provide investors with a vehicle that features lower risk and lower yield, yet also allows the investor to take advantage of a bull market. When choosing an investment option, research is necessary to see if this particular security will be profitable. It is good to remember that convertible bonds sell at a premium to the stock's value. The bondholder is therefore making a tradeoff, lower yields up front for possible gains in stock price down the road. If these gains are not attained, the bondholder has in effect given up the yield spread between the nonconvertible and convertible bonds. It is wise to analyze the quality and stability of a company before one buys bonds or stocks. Does the company have the wherewithal to withstand a recession or economic downturn?

Convertible bonds are a good choice for an investor, but discretion must be used before buying them.

Discuss It!

192.168.1.1|192.168.1.1|192.168.1.1|192.168.1.1 said:

Convertible bonds are a good choice for an investor, but discretion must be used before buying them.

Richest Celebrities & Celebrity Net Worth in 2017 said:

my accomplice and i would not joke about this. you utilize therefore much learning inside this issue, thusly much passion.

mustang roll bar said:

Organization is truly sure and a not too terrible direct interface.Thank you such a stunning total for sharing this bewildering blog.

moving services said:

Our vehicles are collecting and transporting cargo / removals throughout the whole of Europe on a daily basis.

Bestalyze said:

That is to state, I know it was my decision to inspect, paying little respect to I genuinely thought youd have something charming to state.

dish network said:

Thanks to this article for providing us a brief idea on convertible bond trading. I am not familiar with this kind of marketing terms and it is good to see that you have explained it in a simple way. I wish to know more on that. Please update it as early as possible.

best dissertation writing said:

Convertible bond trading has become very demanding now a days and in the field there are some scams. For the new traders, you have shared a complete guide how to stable in this market and earn profit as your desire with investment.

curriki said:

Me and my companions have completely appreciated this blog.

loja pronta magento said:

The most outstanding component about this blog is the means by which it doesn't neglect to keep its gathering of people connected with at each point.

Faux fence said:

thanks for the tips and information..i really appreciate it..

new york city stock aerial photos said:

Once you begin perusing this, you can't stop without finishing it. That is the amount you get consumed into it.

voyant par telephone said:

Perusing something so delightful has a recovering force for the soul.

duo queue boosting said:

A huge shout out to the writer who poured his soul into this blog.

free tour Stockholm said:

Adore how magnificently every word is composed with appropriate adjust.

Most Popular Articles
Most Popular Definitions
 
Daily Definition

Definition of the Day Load-Adjusted Return

Load-Adjusted Return – The load-adjusted return applies to any net return on an investment for a mutual fund. This is the adjusted amount returned after the load amount, along with some other specific charges, as with 12b-1 fees, which are associated with marketing and a calculated amount based on a...

read entire definition

 
 

 

 

Home     About Us    Contact Us     Contribute     Sitemap

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Copyright © 2009 TeenAnalyst.com