Convertible

Convertibles sound quite confusing, but the name is a good idea of what this financial product is.

A convertible therefore is something that can be changed or converted into something else.

It could be something like currency that can be exchanged for a particular amount of gold for instance.

Or maybe a debenture that is swapped at a given price (set) for some particular number of shares that is also set or pre-agreed.

You may often come across it in the world of mortgages, where a convertible usually refers to a variable rate mortgage that can be turned into a fixed rate at the whim of the buyer.

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