Zero-Coupon Convertible
A zero-coupon bond issued by a corporation that can be converted into that corporation's common stock. Also known as a "split coupon bond". Investopedia Says:
Because their price will appreciate with an increase in the stock price of the issuing company, zero-coupon convertibles tend to offer lower yields than regular zero-coupon bonds. The lower yield deters some investors from choosing this type of bond, but, if a potential increase in stock price offers greater capital gains than the accrued interest from the bond, the zero-coupon convertible allows the investor to choose to receive the capital gain. Related Terms:
Bond
Convertible
Convertible Bond
Coupon Bond
Zero-Coupon Bond |