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Convertible Feature on Debt Securities

 

Convertible Feature on Debt Securities

convertible securities, convertible bonds, types of convertible securities, convertible securities example, features of convertible securities, hybrid securities, convertible securities risk, convertible debentures, The convertible feature on debt securities presents different forms of benefits to both the investor and the issuing institution. These benefits are based on what each of the two parties is likely to gain whenever the convertible feature is adopted in issuing the securities. Another source of the benefits also arises from the existence of the time value which is the main consideration in the development of the conversion terms prior to the expiration of the privileges. Advantages and Disadvantages of Convertible Feature on Debt Securities to Investors To the investors, the main advantage that is presented by the convertible securities lies in providing them with the capacity to make higher income since investors can speculate on the price of the shares and purchase them if they suppose that the price of the shares is likely to rise. As the price of the shares rises, the investors get a higher chance to make more returns since they could sell their shares and gain a premium. Other than the selling of the shares, the investors also benefit from attaining yearly dividends which are part of what company owner’s gain. As a rule of thumb, convertible securities offer the investors more time to decide on whether they would like to participate in the company while they offer asset protection. Prior to their conversion, investors are the creditors and would be paid any amounts due from incidents such as liquidation (Dorion et al. 2014). The second advantage of opting for the conversion feature lies in offering the investors a chance to participate in the decision-making process of the organization. The conversion premise is fashioned in such a way that allows the investors to possess common stock with less regard to their initial debt security hence giving them a chance to possess a portion of the company. In the process, the organization losses their control capacity, but the investors who are a shareholder participates in the decision-making process. Their participation often adds value to the organizations ability to make investment decisions. The more the investors, the higher the level of insight in shaping the company. Please Note to have Full View the whole paper as has been Done please Order with us and you will have the paper designed to meet your needs. We even handle synopsis papers

Convertible Feature on Debt Securities

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