Reverse Convertible Securities
A reverse convertible security or reverse convertible is a short-term note linked to an underlying stock. The security offers a steady stream of income due to the payment of a high coupon rate. In addition, at maturity the owner will receive either 100% of the par value or, if the stock value falls, a predetermined number of shares of the underlying stock. In the context of structured product, a reverse convertible can be linked to an equity index or a basket of indices. In such case, the capital repayment at maturity is cash settled, either 100% of principal, or less if the underlying index falls conditional on barrier is hit in the case of barrier reverse convertibles.
Read more about Reverse Convertible Securities: Liquidity, Ratings, Taxes, Investor Benefits, Risk To Consider
Famous quotes containing the words reverse and/or convertible:
“During the late war [the American Revolution] I had an infallible rule for deciding what [Great Britain] would do on every occasion. It was, to consider what they ought to do, and to take the reverse of that as what they would assuredly do, and I can say with truth that I was never deceived.”
—Thomas Jefferson (1743–1826)
“Herein is the explanation of the analogies, which exist in all the arts. They are the re-appearance of one mind, working in many materials to many temporary ends. Raphael paints wisdom, Handel sings it, Phidias carves it, Shakspeare writes it, Wren builds it, Columbus sails it, Luther preaches it, Washington arms it, Watt mechanizes it. Painting was called “silent poetry,” and poetry “speaking painting.” The laws of each art are convertible into the laws of every other.”
—Ralph Waldo Emerson (1803–1882)