Convertible bonds (issued by corporations) are a type of hybrid security that offer interest payments just like regular bonds, while also giving you the option to convert it to the underlying stock.
Convertible bonds can be traded in for a predetermined amount of the common stock of the issuing company, although provisions generally restrict when a conversion can take place.
What else do you need to know about bonds?
Want to learn more before deciding what’s your optimal bond allocation? You might want to check out these other articles to deepen your knowledge.
- What is a bond? (our main article in the bond section)
- What is a bond yield?
- How do bonds work?
- What happens when a bond comes due?