Convertible bonds are a special bond fund issued by stock issuing companies. Convertible bonds are bonds that can be converted into company shares under certain conditions.

For example, a listed company wants to borrow money from you, but he doesn't have much money, so he issues convertible bonds to you, giving you only 1% ~ 2% interest every year, and promises that you can convert the bonds into shares of their company within this period of time. If you convert them into shares and become a shareholder of the company, they don't have to pay you back.

Characteristics of convertible bonds:

1. Convertible bonds are called convertible corporate bonds. In the current domestic market, it refers to bonds that can be converted into company stocks under certain conditions.

2. Convertible bonds have the dual attributes of creditor's rights and options, and their holders can choose to hold the bonds at maturity to obtain the company's principal and interest; You can also choose to convert it into stocks within the agreed time and enjoy dividend distribution or capital appreciation.

3. When convertible bonds lose their conversion significance, as a low-interest bond, they still have a fixed interest income. If the conversion is realized, investors will get the income from selling ordinary shares or get the dividend income.

4. Convertible bonds have the attributes of stocks and bondholders, and combine the long-term growth potential of stocks with the advantages of security and fixed income of bonds. In addition, convertible bonds have the priority to repay than stocks.

Extended information:

Risks that investors should pay attention to when investing in convertible bonds

1. Investors of convertible bonds should bear the risk of stock price fluctuation.

2. Risk of interest loss. When the stock price falls below the conversion price, convertible bond investors are forced to turn into bond investors. Because the interest rate of convertible bonds is generally lower than that of ordinary bonds of the same grade, it will bring interest losses to investors.

3. The risk of early redemption. Many convertible bonds stipulate that the issuer can redeem the bonds at a certain price after a period of issuance. Early redemption limits the investor's highest rate of return. Finally, the risk is forcibly converted.

Reference: Convertible bonds into shares-Baidu Encyclopedia