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Finance GlossaryConvertible Bonds
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Convertible Bonds

Definition of Convertible Bonds

A convertible bond is a hybrid security that’s initially designed to be a debt instrument that pays a fixed interest rate in exchange for a loan. Once the loan’s tenure ends, the holder can decide to take one of either action:

  • Don’t convert bond: face value of the bond is transferred to the holder on maturity
  • Related Terms

    Delivery Notice

    A delivery notice is produced by the seller of a commodity futures contract. It is proof of confirmation of the sellers intention to physically deliver the underlying commodity to the buyer at the pre-agreed date.

    Forex Trading

    Forex trading means buying and selling currency pairs through exchange-traded derivatives or on the OTC market. A currency can only be bought and sold in exchange for another currency, which is why forex trading is always done in pairs.

    Trading forex derivatives is carried out on stock exchanges authorized by regulatory bodies (SEBI & RBI), in tandem with approved brokers who allow users to engage with the forex futures trading and options trading markets.

    Cash Ratio

    A cash ratio measures a company’s ability to fulfill short-term debt obligations using only its cash and cash equivalents, which are known to have high liquidity. The formula for calculating cash ratio is:

    Cash Ratio: Cash + Cash Equivalents / Current Liabilities

    Indices

    Indices are a collection of financial instruments that measure the performance of those very instruments.

    For example, stock market indices like Nifty 50 and Sensex measure the top 50 and 30 stocks by market capitalization.

    If indices go up, it generally means that the underlying stocks are performing well. The opposite is true when indices plummet.

    By the way, there’s no limit to how many instruments an index can track. The Nifty Smallcap 250 tracks 250 stocks whereas Nifty Bank tracks 12 stocks.

    Consumer Price Index

    The Consumer Price Index (CPI) measures how costly goods and services have become over time. It is calculated by measuring the weighted average of the percentage change in the price of a basket of goods and services.

    If the CPI increases, it means that inflation is on the rise. In India, the CPI replaced Whosale Price Index (WPI) as the primary measure of inflation in 2013.

    Anaume Pattern

    An Anaume Pattern can be seen when a gap is filled after a change in the direction of a security or market’s price.

    Anaume Patterns are gap-filling patterns that can signal the reversal of a bearish trend, which is nothing but a potential onset of a bullish trend, when used in conjunction with other patterns.

    Anaume Patterns are also known as exception exhaustion patterns.



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