Accounting Dictionary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Convertible Bond

Definition: A convertible bond is a bond that can be converted to stock using a pre-determined conversion ratio. The conversion option is usually available only at set intervals, and conversion is at the discretion of the bondholder. The presence of conversion rights typically reduces the interest cost of such a bond, since investors assign some value to the conversion privilege.