Zero-coupon convertible bond

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Zero-Coupon Convertible Bond

1. A bond that may be converted into common stock in the company issuing it. A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible option may or may not become worthwhile, depending on how the company is performing. Additionally, like all zeros, they can fluctuate in price, sometimes dramatically, with changes in interest rates.

2. A municipal bond that may be converted into a corporate bond in the company issuing it. A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible options may or may not become worthwhile, depending on how the companies they represent are performing. These zero-coupon convertibles are tax-exempt, but are convertible to other bonds that may yield more.

Zero-coupon convertible bond.

A zero-coupon convertible bond, like other convertible bonds, can be converted into stock in the issuing corporation if the stock reaches the trigger price.

Municipalities may issue tax-exempt zero-coupon convertible bonds you can exchange before maturity for conventional taxable bonds.

The advantage of both taxable and tax-exempt zero-coupon convertibles is that they give you access to a potentially substantial gain for a small initial investment since you purchase the zero-coupon for less than the face value. But like all zero-coupons, these convertibles tend to be more volatile in the secondary market than nonconvertible bonds.

References in periodicals archive ?
the Au"Company") hereby notifies that the conversion rights associated with the Euro Yen Zero Coupon Convertible Bonds due 2015 issued on February 4, 2010 by the Company has been finally exercised as follows.
9 million) offering of zero coupon convertible bonds.
NYSE:DO) today announced its decision to redeem on May 28, 2010 all of its outstanding Zero Coupon Convertible Debentures Due June 6, 2020 at the redemption price of $706.
30 /PRNewswire-FirstCall/ -- CSX Corporation today announced that in accordance with the terms of its Zero Coupon Convertible Debentures Due 2021, the yield to maturity on the debentures will be reset to 2.
7 billion of Zero Coupon Convertible Debentures due 2019 to be issued in exchange for Interest Bearing Debt
The purchase price for each $1,000 principal amount of Zero Coupon Convertible Debentures due 2021 (the "Zero Coupon Convertible Debentures Purchase Price") is $824.
NYSE:RIG) today announced that it has called its Zero Coupon Convertible Debentures due May 2020 and its 1.
Holders of the Zero Coupon Convertible Notes must tender their Notes and deliver their consents by 12:00 midnight, New York City time, on May 24, 2007, unless such date is extended or earlier terminated, to be eligible to receive the Zero Coupon Convertible Notes Purchase Price (defined below).
195 million in zero coupon convertible junior subordinated notes due 2009;
Tuesday (May 13, 2003), announced the results of the Company's offer to purchase the Zero Coupon Convertible Senior Notes Due 2021 issued by the Company.
Anixter's zero coupon convertible senior notes are not guaranteed by AI and, therefore, are structurally subordinated to AI's debt.
Calpine Corporation today announced it has elected to pay the purchase price of its Zero Coupon Convertible Debentures due April 30, 2021 entirely in cash to those holders who deliver a valid notice of purchase, and not withdrawn, in accordance with instructions to be delivered to the holders by the trustee, Wilmington Trust Company.