The advantage gained by purchasing convertible securities instead of common stock, which equals the difference between the rates of return of the convertible security and the common shares.
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The yield of a publicly-traded company's convertible securities minus the yield on the dividends of its common stock. The yield advantage is important in determining whether it would be better to buy convertible securities or common stock, and whether it would be profitable to exercise the convertible option on the convertible securities.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The additional current return from holding a convertible security as opposed to owning the stock into which the convertible can be exchanged.
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.