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To change a convertible security into the underlying security. For example, if one converts a convertible bond for Johnson & Johnson, one exchanges the bond for the agreed-upon number of common shares in Johnson & Johnson. See also: Conversion option, Conversion price.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
To exchange one security for a different security. For example, the owner of a convertible bond can choose to submit the bond to the issuer for conversion into a specified number of shares of stock.
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.