Encyclopedia of Investment Terminology

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Convertible Debenture

A convertible debenture is a bond that can be exchanged for stock. This bond can be switched to shares in a particular stock that belongs to the company that first issued the bond. It can also be switched into cash at a value that the issuer and investor agree upon. This is a popular type of bond among bond issuers in that it reduces cash interest payments it would normally have to give to investors if the bond wasn't convertible.

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