Introduction to the basics of convertible bonds of listed companies
convertible bonds is a bond in which bond holders can convert bonds into ordinary stocks of the company at the agreed price at the time of issuance. If the bondholder does not want to convert, he can continue to hold the bond until the repayment period expires, or sell it to the circulation market to cash out. If the holder is optimistic about the appreciation potential of bond issuance company stock , he can exercise the conversion right after the grace period and convert the bond into stocks according to the predetermined conversion price. The bond issuance company shall not refuse. The bond interest rate is generally lower than the bond interest rate of ordinary companies, and the issuance of convertible bonds by companies can reduce the financing costs. The holder of convertible bonds also enjoys the right to sell the bonds back to the issuer under certain conditions, and the issuer has the right to force redeem the bonds under certain conditions.
Since convertible bonds can be converted into stocks, it can make up for the shortcomings of interest rate . If the market price of a stock exceeds its conversion price during the convertible period of the transfer, the holder of the bond can convert the bond into stock and obtain a greater profit.
