Exchangeable bond: Difference between revisions

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A straight bond with an embedded option to exchange the bond for the stock of a company other than the issuer (usually a subsidiary or company in which the issuer owns a stake) at some future date and under prescribed conditions.  
A straight bond with an embedded option to exchange the bond for the stock of a company other than the issuer (usually a subsidiary or company in which the issuer owns a stake) at some future date and under prescribed conditions.  
This right is an option in favour of the holder / investor.
In return for this additional valuable right, the investor is generally willing to accept a lower rate of interest on the debt.
This saves interest for the issuer / borrower, at the cost of writing the option.




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* [[Convertible bonds]]
* [[Convertible bonds]]
* [[Embedded option]]
* [[Embedded option]]
* [[Issuer]]
* [[Option]]
* [[Option]]
* [[Straight bond]]
* [[Straight bond]]

Revision as of 15:32, 16 November 2022

(XB).

A straight bond with an embedded option to exchange the bond for the stock of a company other than the issuer (usually a subsidiary or company in which the issuer owns a stake) at some future date and under prescribed conditions.


This right is an option in favour of the holder / investor.

In return for this additional valuable right, the investor is generally willing to accept a lower rate of interest on the debt.

This saves interest for the issuer / borrower, at the cost of writing the option.


See also