Lg3 lg4 163 convertible securities conversion feature

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Unformatted text preview: LG3 LG4 16.3 Convertible Securities conversion feature An option that is included as part of a bond or a preferred stock issue and allows its holder to change the security into a stated number of shares of common stock. A conversion feature is an option that is included as part of a bond or a preferred stock issue and allows its holder to change the security into a stated number of shares of common stock. The conversion feature typically enhances the marketability of an issue. Types of Convertible Securities Corporate bonds and preferred stocks may be convertible into common stock. The most common type of convertible security is the bond. Convertibles normally have an accompanying call feature. This feature permits the issuer to retire or encourage conversion of outstanding convertibles when appropriate. convertible bond A bond that can be changed into a specified number of shares of common stock. straight bond A bond that is nonconvertible, having no conversion feature. Convertible Bonds A convertible bond can be changed into a specified number of shares of common stock. It is n...
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