• Convertible securities are securities that can be redeemed in cash or shares of the issuing company, subject to certain conditions.

  • Hanging convertible securities are convertible securities whose price of the underlying security is significantly lower than the conversion price, making it unlikely that the securities will be converted into ordinary shares.
  • Due to limited convertibility prospects, hover convertibles, also known as busted convertibles, trade more like debt instruments.
  • Most companies prefer not to have convertible convertible assets, as these liabilities must be repaid in cash.
  • To solve the stuck convertible stock problem, the company needs to improve its fundamentals to push the common stock high enough to reach the conversion price.