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Home > QFINANCE Dictionary > Definition of convertible security

Definition of

convertible security

Stockholding & Investments

investment product that can be converted to another a bond, warrant, or share of preferred stock that can be converted into another type of security, especially common stock

Recommended Further Reading (Term count)
  • Convertible Preferred Stock
    Evaluating convertible preferred stock is principally an analysis of risk rather than of a company. Preferred stocks are listed as equity on a balance sheet, but they perform more like bonds than common stock since most of these issues pay a fixed dividend set at the time of issue. While holders of preferred stock are entitled to a fixed dividend, they do not usually have voting rights. Preferred stocks are usually repayable at par value, and...
  • Understanding the True Cost of Issuing Convertible Debt and Other Equity-Linked Financing
    by Roger Lister
    Convertible securities (CSs) and other equity-linked instruments combine debt and equity. Depending on the terms and the issuer’s future performance, CSs can range from almost pure equity to an option-free bond. In option terms, a CS can be viewed in two ways. It amounts to a straight bond with a call option on a specified number of shares. It is also effectively a share with a put option whose exercise price is the market value of the...
  • Private Investments in Public Equity
    by William K. Sjostrom, Jr
    PIPE transactions are highly negotiable; hence, there is a fair amount of variation from deal to deal with respect to the attributes of the PIPE securities. PIPE securities may consist of common stock or securities convertible into common stock, such as convertible preferred stock or convertible notes, and may be coupled with common stock warrants.Regardless of the type of securities involved, PIPE deals are categorized as either traditional or...
  • Optimizing the Capital Structure: Finding the Right Balance between Debt and Equity
    by Meziane Lasfer
    There are three financing methods that companies can use: debt, equity, and hybrid securities. This categorization is based on the main characteristics of the securities.Debt FinancingDebt financing ranges from simple bank debt to commercial paper and corporate bonds. It is a contractual arrangement between a company and an investor, whereby the company pays a predetermined claim (or interest) that is not a function of its operating performance,...

Definitions of ’convertible security’ and meaning of ’convertible security’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’convertible security’ and other financial terms with our online QFINANCE Financial Dictionary.

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