Generally speaking, if listed companies want to borrow money from investors, issuing convertible bonds is a common financing method. Convertible bonds also have a name called convertible corporate bonds, which means that they are both bonds and can be converted into stocks under certain conditions, which actually makes borrowers become shareholders immediately and increases profits.
For example, at present, listed companies issue convertible bonds with a face value of 100 yuan. Assuming that 5 yuan is the conversion price, it is equivalent to converting into 20 shares in the future. After that, if the stock price rises to 10 yuan, the original convertible bonds with face value of 100 yuan can now be converted into shares of 10×20 = 200 yuan, and the overall income will be doubled. But if the stock price falls, we can choose to continue to hold non-tradable shares. During the holding period, the company will continue to pay you interest. In addition, some convertible bonds can support the recovery. For example, when the closing price of 30 consecutive trading days in the last two interest-bearing years is lower than 70% of the current conversion price, we can also propose that the company sell our bonds back at the face value of the bonds plus the current interest. So we can see that convertible bonds not only have the stability of bonds, but also make you feel the excitement brought by stock price fluctuations. They can also be used as a tool for asset allocation, which can take into account higher returns and also resist the risks brought by the overall market decline. For example, in one year, PCG convertible bonds rose from the initial 100 yuan to the highest 36 18 yuan, which is very good.