CONVERTIBLE ARBITRAGE


Meaning of CONVERTIBLE ARBITRAGE in English

Mainly applies to convertible securities. A practice, usually of buying a convertible bond and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position (with expected returns above the riskless rate ) in a static environment and capital appreciation should the convertible's premium expand. This form of investing is far from riskless and requires constant monitoring. See: Chinese hedge and set up .

Campbell R. Harvey. Hypertextual finance English glossary.      Английский словарь гипертекстовых финансов.