Convertible arbitrage - Mainly applies to convertible securities. A practice, usually of buying a convertible bond and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position (with expected returns above the riskless rate) in a static environment and capital appreciation should the convertibles premium expand. This form of investing is far from riskless and requires constant monitoring. See: Chinese hedge and set up.
Convertible arbitrage : mainly applies to convertible securities. a practice, usually of buying a convertible bond and shorting a percentage of the equivalent underlying common shares to create a positive cash flow position (with expected returns above the riskless rate) in a static environment and capital appreciation should the convertibles premium expand. this form of investing is far from riskless and requires constant monitoring. see: chinese hedge and set up.
Convertible arbitrage