convertible bonds are bonds that bondholders can convert bonds into ordinary stocks at the agreed price at the time of issuance. They have the dual characteristics of bonds and equity. After listing, they will earn interest on holding the convertible bonds within the maturity period, and repay the principal and interest after maturity. Generally speaking, if they convert convertible bonds into stocks within the conversion period, they will no longer enjoy the interest income of convertible bonds, but they can get dividend income.

interest income of convertible bonds = principal × annualized interest rate. For example, if an investor has a convertible bond of 1, yuan, its annualized interest rate is 1.5% and the maturity period is six years. After holding it for one year, the investor can get interest income of 1,× 1.5% = 1,5 yuan.

the interest rate of convertible bonds is generally lower than that of ordinary bonds, and the financing cost of enterprises will be reduced to some extent by issuing convertible bonds.