Busted Convertible

Busted Convertible - A busted convertible is a security, in the form of a bond, debenture, or preferred stock that can be exchanged at the discretion of the holder for a common stock from an issuing corporation, whose market price of common stock is extremely low which makes the convertible feature nearly worthless, and not worth considering. When this occurs these busted convertible securities trade as if they are fixed income securities or investments, which are also known as fixed income equivalent. Many investors prefer fixed income investments during times when the inflation is low, although their worth decays when periods of inflation are high.