difference between
force and convertion.
Answers
Explanation:
What Is a Forced Conversion?
Forced conversion occurs when the issuer of a convertible security exercises their right to call the issue. In doing so, the issuer forces the holders of the convertible security to convert their securities into a predetermined number of shares.
How Forced Conversions Work
Forced conversions are one of the risks faced by buyers of convertible securities, which are a type of debt instrument that can be converted into shares of underlying stock. For example, a convertible bond might give the investor the right to exchange their debt instrument into a certain number of shares in the company issuing the bond. Depending on how the price of the shares changes over time, the bondholder may feel that they are better off exercising their conversion privilege and becoming a common shareholder.
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