Zero Coupon bonds
In finance, a convertible note (or, if it has a maturity of greater than 10 years, a convertible debenture) is a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. It is a hybrid security with debt- and equity-like features. Although it typically has a low coupon rate, the instrument carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's equity value. The investor receives the potential upside of conversion into equity while protecting downside with cash flow from the coupon payments.
From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment. However, in exchange for the benefit of reduced interest payments, the value of shareholder's equity is reduced due to the stock dilution expected when bondholders convert their bonds into new shares.
a zero-coupon bond issued by a corporation which can be converted into that corporation's common stock at a certain price, or a zero-coupon bond issued by a municipality which can be converted into an interest-bearing bond under certain circumstances. also called split coupon bond. [For more on Covertible Bonds Please visit http://en.wikipedia.org/wiki/Convertible_bond ]
In Bangladesh, for the first time ACI declare zero coupon convertible bonds for local Stock Market. It's RPO will start on 31st January , 2010.
Details has been given in scanned images.
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