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


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