What are the features of convertible debentures? - Please explain briefly.

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Uma asked about 3 years ago

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered about 3 years ago

**FEATURES OF CONVERTIBLE DEBENTURES** Following are the features of convertible debentures: Conversion ratio: It refers to the number of shares every convertible debenture is exchanged into. It can be represented on the basis of per centum (or per 100) or per debenture. Conversion price: The face value per share on which the conversion is carried out Conversion premium: It denotes the difference between the parity value of the convertible debenture and the market value of the convertible debenture Conversion value or parity value: Conversion ratio * equity price Call features: The issuer of convertible debenture has the option of calling a convertible debenture ahead of time (in case of specific types of debentures). However, on certain occasions, this happens according to the performances of particular stock prices. The aim behind this is to motivate the investors regarding early changeover to stocks (that has got higher value in comparison to the par value of the debenture) through forbidding cash repayment for the lesser current value. Thanks

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