What You Need to Know About Convertible

A convertible is something that can be changed into another form or function. The word can be used to describe various products, such as cars, securities, furniture, and clothing. In this article, we will focus on two common types of convertibles: cars and securities.

Convertible Cars

A convertible car is a passenger vehicle that can be driven with or without a roof in place. The roof can be made of cloth, metal, or plastic, and can be folded or removed manually or automatically. Convertible cars offer an open-air driving experience, but they also have some drawbacks, such as reduced structural rigidity, higher cost, lower security, and less cargo space.

Convertible cars have been around since the early days of automobiles, when most cars were open-air vehicles. As closed cars became more popular and affordable in the 1920s and 1930s, convertibles became a niche market for luxury and sports models. However, convertibles regained popularity in the 1950s and 1960s, especially in the United States, where they were seen as symbols of freedom and fun. Since then, convertibles have continued to appeal to a variety of customers who enjoy the thrill of driving with the wind in their hair.

There are different terms for convertible cars in different regions and languages. For example, in the United Kingdom, a two-door convertible is called a drophead coupé, while a four-door convertible is called an all-weather tourer. In French, German, Italian, and Spanish, a convertible is called a cabriolet or cabrio, which derives from a type of horse carriage with a folding top. In some cases, the term spider or spyder is used to refer to a sporty convertible with two seats.

Convertible Securities

A convertible security is a financial instrument that can be converted into another type of security, usually common stock. The most common types of convertible securities are bonds and preferred shares. Convertible securities offer investors the opportunity to benefit from both the fixed income of bonds or preferred shares and the potential upside of common stock.

A convertible bond is a type of bond that gives the bondholder the right to exchange the bond for a predetermined number of shares of the issuing company at any time before the bond matures. A convertible bond typically pays a lower interest rate than a comparable non-convertible bond, because the bondholder has the option to convert the bond into stock if the stock price rises above a certain level. A convertible bond also has less downside risk than a non-convertible bond, because if the stock price falls below a certain level, the bondholder can still receive the principal and interest payments of the bond.

A preferred share is a type of share that gives the shareholder a fixed dividend payment and priority over common shareholders in case of liquidation. A convertible preferred share is a type of preferred share that gives the shareholder the right to convert the preferred share into a predetermined number of common shares at any time. A convertible preferred share typically pays a lower dividend rate than a comparable non-convertible preferred share, because the shareholder has the option to convert the preferred share into stock if the stock price rises above a certain level. A convertible preferred share also has less downside risk than a non-convertible preferred share, because if the stock price falls below a certain level, the shareholder can still receive the dividend payments and liquidation preference of the preferred share.

Conclusion

Convertibles are versatile products that can adapt to different situations and preferences. Whether you are looking for a car that can give you an exhilarating ride or a security that can give you an attractive return, you might want to consider investing in a convertible.