BONDS ONE DAY, STOCK THE NEXT

Convertible bonds offer capital appreciation that traditional bonds do not.  They provide the security and predictable income of a bond with the opportunity to benefit from stock price increases.  Although they pay a lower interest rate than other bonds, they more than compensate for this drawback with the downside protection they provide.  This tutorial has taught you the basic terms used to describe convertible bonds as well as how they compare to regular bonds and securities.

If you would like to learn about other types of bonds, please see the tutorials on mortgage bonds or municipal bonds.