1. Convertible bonds are essentially investable securities.
First, it is defined as a bond.
The second is convertible, which can be converted from bonds to stocks. Bonds and stocks are completely different types. We think bonds are safer and stocks are riskier, but convertible bonds can enjoy this kind of security and high yield, so everyone buys them crazily.
Suppose I don't transfer bonds, then I will follow suit. Generally speaking, the interest rate of convertible bonds is very low. Generally speaking, the interest rates in the market are above 10%, above 20%, 4% and 5% respectively. The interest rates of convertible bonds are 0.8% and 1%, so the company is willing to pay, and the interest rate is too low. If the cost is low, I will issue convertible bonds. But why are investors willing to buy? Because if the price goes up and the stock price goes up at that time, I will convert it into equity. Suppose the daily limit of Shanghai Pudong Development Co., Ltd. goes up, and I buy the equity of 50 yuan, and then transfer it to 100 yuan, and the stock price is 100 yuan. At this time, it will be profitable to convert it into stocks immediately. If the stock price falls, I will hold a bond with 0.8% interest due, but the principal is still there, with at least 0.8% interest. Therefore, convertible bonds are essentially arbitrage in the market, and there is room for arbitrage, so this example will appear.
3. Another example: arbitrage, such as first-hand houses and second-hand houses. This first-hand house is a new house, and the government has a record price. But the listing price of second-hand houses is different, so in the same community, many people buy first-hand houses, make money when they buy them, and then sell them in the second-hand market, so I can make money. This is the money sent to me by the government, and there is no risk arbitrage. Convertible bonds are like this. Moreover, convertible bonds usually have trading opportunities, and ordinary investors should consult professionals more.