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Negotiable
Financial Instruments > This page
Convertible Securities
(Source: Merrill
Lynch)
What
Are Convertible Securities? (Member
section)
Advantages of Convertible Securities (Member
section)
What
Are Convertible Securities?
Established investors are becoming more aware of the importance of supplementing
their income with equity-oriented investments to help outpace the effects
of inflation. Convertible securities (convertibles) offer the potential
advantages of debt and equity securities, combining attractive yields
of traditional fixed-income securities with the capital-appreciation potential
of common stocks.....................
Advantages
of Convertible Securities
Opportunity
for equity participation
Generally, convertible securities may be exchanged at any time for a fixed
number of shares of their underlying common stock. This option provides
the potential for significant growth.
Relative
stability
Many convertibles tend to outperform common stocks in a falling
market, because their higher yields cushion the effects of a market decline.
In a rising equity market, convertibles provide an opportunity for capital
growth, although they tend to appreciate less than common stocks.
In a stable equity market, convertible securities' higher yields and conversion
feature provide attractive total returns.
Greater
control of investment
Most convertibles can ....................................
More
information is provided in the Member Area
Recommended
further reading:
Treasury
Bills
Treasury Bills: How Marketable Treasury
Securities Really Work
Treasury Bills, Notes &Bonds
Treasury Bills: U.S. Treasury Securities
Corporate Debt Securities
Books
on Financial Instruments
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