Difference Between Convertible And Non-convertible Debenture?
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Convertible debentures can be converted into company stocks whenever the holder pleases, they tend to have lesser rate of return compared to nonconvertible ones. On the other hand, nonconvertible debentures cannot be converted into company equity or stocks. This makes them riskier than bonds or convertible debentures. This is why, as compensation, the interest rates are higher than other debentures.
It is usually suggested that investors should consider putting 5 to 10 percent of investment savings into convertible bonds while keeping the rest in traditional stocks and bonds.