Whats the difference between convertible notes and company bonds?

Posted by admin on Dec 30th, 2009 and filed under Home Security Companies. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Hi guys

I am doing a practise exam at home and I am just wondering, is the main difference between the two is that a CONVERTABLE NOTE is a Hybrid security (i.e. converts into ordinary shares at the end) and Company bonds is just debt which ends at maturity?

Is there any other major differences?

Cheers

Paul

1 Response for “Whats the difference between convertible notes and company bonds?”

  1. Sandy says:
    December 30, 2009 at 3:29 am

    You are right. That is the main difference.

    A Convertible Note is a type of coupon paying debt security that converts to the issuers ordinary shares (equity) at maturity. Generally speaking these securities pay a fixed (or floating) return until a certain date when the security can be converted into the underlying shares of the issuer.

    A Corporate Bond is a fixed interest investment, providing regular interest payment during the term of the bond, then returning your upfront investment at the fixed end date or maturity. There is such a thing as a Convertible Bond.

    You can read more about Hybrid Securities at the link.

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