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A financial instrument that can be exchanged for another security or equity interest at a pre-agreed time and exchange ratio.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A bond or preferred stock that may be exchanged for common stock in the company issuing the convertible at a certain ratio and/or a certain price. A convertible security gives the holder a great deal of flexibility. It reduces risk by guaranteeing a coupon payment or dividend while also allowing the holder to take advantage of a potential, larger return through the ability to convert the security. See also: Convertible option.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
See convertible security.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
A bond or preferred stock that may, under specified conditions, be exchanged for common stock or another security, usually of the same corporation.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary