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 ?
Laboratory Corporation of America Holdings (LabCorp) announced today that its Zero Coupon Convertible Subordinated Notes due 2021 (Zero Coupon Notes) may be converted as set forth below.
M2 EQUITYBITES-July 4, 2016-LabCorp announces conversion right for zero coupon convertible subordinated notes due 2021
9 million) offering of zero coupon convertible bonds.
Laboratory Corporation of America Holdings (LabCorp) (NYSE: LH) announced today that its Zero Coupon Convertible Subordinated Notes due 2021 (Zero Coupon Notes) may be converted as set forth below.
M2 EQUITYBITES-March 14, 2016-LabCorp to pay contingent cash interest on zero coupon convertible subordinated notes on 12 September 2016
The Firm represented the underwriters, led by Merrill Lynch, Citigroup and Credit Suisse, in the offering of US$300 million principal amount of Zero Coupon Convertible Bonds (the Bonds ) by Zhen Ding Technology Holding Limited ( Zhen Ding ).
98 per note contingent cash interest for zero coupon convertible subordinated notes
A resolution has been passed by the Board of directors of Renaissance Services in order to raise RO40 million through the issue of zero coupon convertible bonds.
M2 EQUITYBITES-January 5, 2015-LabCorp to announce conversion of its zero coupon convertible subordinated notes
2m of Zero Coupon Convertible senior subordinated notes due 2024(C)2012 M2 COMMUNICATIONS http://www.
ON Semiconductor Corporation (Nasdaq: ONNN) , a provider of high performance silicon solutions, announced on Monday that it is exercising its option to redeem all remaining outstanding zero coupon convertible senior subordinated notes due 2024, Series B, amounting to an aggregate principal amount of USD96.
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.