What is convertible debt?
Convertible debt is a type of debt security that can be converted into a predetermined amount of the underlying company’s equity at certain times through the life of the debt security. The convertible debt would have a stated conversion rate like the debt would convert into 10 shares of common stock.
However, until the debt is converted into equity of the company, investors will typically earn a fixed interest rate (e.g. 10%). Convertible debt will typically pay a lower interest rate compared to more traditional debt (i.e. bonds or loans).
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What are examples of debt securities?
A debt security is any security that is representing a creditor relationship with an outside entity. Examples of debt securities include corporate bonds, redeemable preferred stock, commercial paper, convertible debt, and government securities.
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What is commercial paper?
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What is a corporate bond?
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What are examples of debt securities?
A debt security is any security that is representing a creditor relationship with an outside entity. Examples of debt securities include corporate bonds, redeemable preferred stock, commercial paper, convertible debt, and government securities.
What is commercial paper?
Commercial paper is basically a short-term unsecured note issued by companies with a promise to pay back the note at a specific point in time. Commercial paper is rarely issued for longer than 270 days. Commercial paper can be risky from the investors perspective because there is typically no collateral that backs commercial paper.
What is a corporate bond?
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