Conversion ratio and Outright Monetary Transactions: Difference between pages

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''Convertible bonds''.
(OMT).


The number of ordinary shares (or other securities) for which each convertible bond may be exchanged, at the bondholder's option.
Part of the [[open market operations]] of a central bank in which the central bank buys or sells securities outright - i.e. without the re-sale or re-purchase legs of [[reverse repurchase agreement]]s or [[repurchase agreement]]s.


For example, if each convertible bond may be exchanged for 40 ordinary shares, then the conversion ratio is 40.
This was a new tool for the European Central Bank in 2012 - and controversial, especially in Germany - though its use by other banks has not been so dogged by controversy.


 
[[Category:Risk_frameworks]]
== See also ==
* [[Convertible bonds]]

Revision as of 19:06, 28 August 2014

(OMT).

Part of the open market operations of a central bank in which the central bank buys or sells securities outright - i.e. without the re-sale or re-purchase legs of reverse repurchase agreements or repurchase agreements.

This was a new tool for the European Central Bank in 2012 - and controversial, especially in Germany - though its use by other banks has not been so dogged by controversy.