Convertible Bonds

What are Convertible Bonds?

Convertibles, part stock and part bond, give you the opportunity to earn interest and capital appreciation. As investors have the option to exchange these securities for shares of common stock at a preset price, the value of that option, and the convertible itself, increases as the stock price climbs. But if the stock gets hammered, the convertible's interest and principal payments help limit losses. (Convertible preferred shares, a smaller portion of the overall market, also share similar traits).

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