What is a convertible note?

Convertible note is an investment that the investor can exchange in the future for stocks in the future. Most convertible tools begin as business bonds issued by organization. Bonds have a low interest rate because the company will not desire high interest rates for future payouts before the tool exchange. Domestic and international investors can use these investments. Investment markets from the United States, Japan, Canada, Europe and Asia and have a wide range of convertible notebooks investors who can buy investors in the hope of a future stock exchange. The first advantage for the company is the ability to offer low bond interest rates. Investors buy these investments on the basis of hope of the future stock exchange, not the planned date of the stock exchange. Therefore, the company can participate in debt financing with low debt interest payments. This increases the return on investment for the tools sold convertible tools. Other investors and reviewers of the companyThey will consider this return to be a good thing because bonds will not weigh too much profits, assets or other financial information.

Another advantage is the ability to immediately delete debt from the company's accounting books. The high debt listed in the balance sheet of society is never good. However, through the sale of convertible notes, the company can transfer a large bond glass to stocks and the debt disappears with the draft of the accounting pencil. While the Company will have to publish the financial statements to explain this transaction to all investors, the transfer allows a reduction in the transaction with a transaction with a transaction with a transaction to become less of the company's assets.

A significant disadvantage to convert convertible notebooks into stocks is the dilution of the current value of shareholders. All shareholders - from individual investors to financial institutions - will have a total investment value because of the conversionMultiple shares of shares are entering the market. Current shareholders often do not like the notion of loss of value this conversion. One way that investors can alleviate this value loss is to purchase a part of convertible bonds offered by companies. When it transforms, the total sharing value should have less negative effects from convertibles to a common exchange.