Investing in convertible bonds

Investing in convertible bonds

The financial market offers numerous investment opportunities for you to invest your capital in and benefit from it. The different options available vary based on the amount of capital that you decide to invest and the amount of risk you are willing to take. One of these investments is represented by the convertible bonds.

Convertible bonds are bonds that they reserve the option to be converted into shares within certain fixed periods, or that may remain so until the time comes for them to expire. There are generally divided into two types: those in the direct conversion and those in indirect conversion. The former allows someone to become shareholders of the company to which you are running the transformation of the bond. The latter allow investors to take possession of shares issued by companies. Depending on your available capital and the way you want to invest, you can choose the option that is better for you.

Making the decision to invest in convertible bonds allows you to have a guaranteed return that is directly proportional to the rate of interest demanded by the market at the time of their issue. This rate may be fixed or variable. When the title comes to its expiration, the investor will collect the face value of the security, or may decide to convert it.

Checking the current trends in the market

Checking the current trends in the market

Investing in convertible bonds is a perfect choice for the kind of investor who wants to become a shareholder in a company without that posing undue risk to him. You should have a basic knowledge of the financial market in order to make the right move at the right time. To do so, use the Internet to search for relative material. Once you buy these bonds, they can be exploited speculatively. If the underlying shares go up in value then you can earn the same amount. However, in case the opposite happens, the bonds will earn their preset value.

Opt for these bonds allows you to take advantage of the trend of the stock market. At a time when it is positive, you will have the opportunity to supplement your income owing to it. If, instead, the trend is not favorable, it will cash out a well determined value. Even in this case, it is always good to bear in mind the risk of each investment. It would be advisable not to put your money in front of an excessive risk to avoid losing it in a total way.

By +Nikos Kontorigas

About Nikos Kontorigas

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