Busted Convertible Security

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Busted Convertible Security

A convertible security in which the underlying stock is trading 50% or more below the value of the convertible option. This renders the convertible option nearly worthless, and the security acts like common debt. This is considered a low risk investment with the possibility of high return because a busted convertible usually has a fixed return, and there is a small chance that the stock will recover allowing the investor to exercise the convertible option.
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We believe growth equities will outperform fixed income equivalents in 2002, ending their two-year losing streak particularly as interest and inflation rate levels are now favorable for growth equities," said David Readerman, Growth Equity Strategist at Thomas Weisel Partners.

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