Premium Put Convertible Bond

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Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated October 6, 2020

What is a Premium Put Convertible Bond?

A premium put convertible bond is a bond that can be redeemed by the investor at premium before its maturity date.

How Does a Premium Put Convertible Bond Work?

Premium put convertible bonds have a feature comparable to a put option that permits the holder to redeem the bond at a premium in advance of maturity date. For example, an investor who owns a hypothetical premium put convertible bond with a par value of $1,000 but a market value of $1,200 can force the issuer to buy the bond back for its $1,200 market value. 

Why Does a Premium Put Convertible Bond Matter?

Premium put convertible bonds give investors the opportunity to benefit from an increase in market value. It should be noted that the coupon rate for premium put convertible bonds is generally lower than that of regular bonds because the investor is receiving potential upside on the bond price instead of higher guaranteed interest payments.

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At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Premium Put Convertible Bond.
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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Premium Put Convertible Bond, then please ask Paul.

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