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What is a convertible bond?
A convertible bond combines the security of bonds with the potential gain of stock by giving you the right to trade in or convert a corporate bond into company stock.
The conversion terms, including the date when the conversion can be made and how many shares you receive in exchange for each bond, are set when the bond is first issued.
Convertible bonds don’t usually pay as much interest as traditional bonds because if the stock rises sharply, investors can trade the bonds for stock and make a profit.Return to Questions
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