March 2014
Intermediate to advanced
224 pages
6h 29m
English
Content preview from Visual Guide to Hedge Funds
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CHAPTER 9 Convertible-Arbitrage Strategy
The convertible-arbitrage strategy thesis is similar to long/short equity or capital-structure arbitrages where the portfolio manager is looking to benefit from the pricing of a company’s convertible bond relative to its common stock.
What is a Convertible Bond?
A convertible bond is a hybrid fixed-income security that has a bond component that pays a coupon, along with an equity component that contains optionality that is linked to a conversion feature. The option portion of the convertible bond allows the holder to exchange the ...