What is a 'Convertible Bond'?

A convertible bond is a type of debt security that can be converted into a predetermined amount of the underlying company's equity at certain times during the bond's life, usually at the discretion of the bondholder. Convertible bonds are a flexible financing option for companies and are particularly useful for companies with high risk/reward profiles. Convertible bonds are sometimes referred to as "CVs."!--break--Convertibles bonds are issued by companies for a number of reasons. Issuing convertible bonds is one way for a company to minimize negative investor interpretation of its corporate actions. For example, if an already public company chooses to issue stock, the market usually interprets this as a sign that the company's share price is somewhat overvalued. To avoid this negative impression, the company may choose to issue convertible bonds, which bondholders are likely to convert to equity anyway should the company continue to do well.

Present Value of Ordinary Annuity Formula
$$ Stock \space dividend \space yield = \frac { stock \space dividend }{ stock \space price } $$ $$ Conversion \space ratio = \frac { convertible \space market \space price }{ conversion \space price} $$ $$ Conversion \space value = \frac { stock \space price }{ conversion \space ratio} $$
30.00 = stock price
0.50 = stock dividend
$1000 = convertible market price
20 = maturity (years)
36.37 = conversion price

Stock price per share ($):
Stock dividend per share ($):
Convertible market price ($):
Maturity (years):
Conversion price($):


The information received by subscribers is for their personal use. Investing involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. Nothing contained herein should be construed as a warranty of investment results. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. It is possible that Investment Models, Inc., may have a position in stocks or funds discussed within this site or in correspondence sent to clients.

All information provided or contained in this Web site is the property of BioCrude Technologies, Inc., and should not be reproduced, copied, redistributed, transferred, or sold without the prior written consent of BioCrude Technologies, Inc. All rights reserved.