Investor Glossary-zero-coupon convertibleInvestor Glossary-zero-coupon convertibleInvestor Glossary-zero-coupon convertibleInvestor Glossary-zero-coupon convertibleInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Zero-coupon Convertible

The HTML to link to this page
 

A bond that has no coupon and is convertible into the common stock of the issuing company is referred to as a zero-coupon convertible. A zero-coupon convertible is similar to a zero-coupon bond in that its value will fluctuate with changes in interest rates. A zero-coupon convertible differs from a zero-coupon bond in that its value increases as the share price of the issuing company increases. This occurs because the conversion feature of the zero-coupon convertible becomes more valuable with a rising share price. A zero-coupon convertible is sold at a discount to face value and matures at face value. As a result, reinvestment risk associated with zero-coupon convertible investments is minimal. An advantage associated with the zero-coupon convertible is the flexibility of choosing between accrued interest on the bond or recognizing capital gains on the conversion. The market for zero-coupon convertible securities is relatively illiquid so this security is seldom held by retail investors.



Rate this zero-coupon convertible definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: implied volatility, EBITDA, APR, liquidity ratio, labor relations, VIX, current ratio, 1031 exchange, balance sheet, ex-dividend, FTSE, risk management, Zero Cost Collar, retained earnings, dividends payable, stock market close, phantom income, diluted share, debt service coverage, required rate of return, 1035 exchange, command economy, inflation, 144a, real GDP, annual return, limit order, deferred tax, stock split, 401a, wholly-owned subsidiary, margin rate, class C shares, option premium, in escrow, open position, deferred revenue, Key Rate Duration, minority interest, per diem, ex-dividend date, covered put, reverse mortgage, cancelled check, average price per share, FICO score, quality assurance, LIBOR, irrevocable trust


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use