Convertible Bonds Investment Research

Convertible bonds, the full name of which is convertible corporate bonds, mean the bonds that can be converted into corporate stocks under some condition. Convertible bonds have the characters of both bonds and stocks. The holders can choose the fixed revenue because the corporates will return the cost and pay for the interests when it comes to the maturity date. It can also choose to convert them to stocks at the appointed time, enjoying the revenue of dividend distribution and capital appreciation. Convertible bonds have the characters of bonds, stocks and derivative options.This paper, combined with the characteristic of convertible bond, analyzed the pros and cons of convertible bonds. It fully illustrates low risk investment advantage "not capped, under the remedial" of convertible bond. In the meanwhile, it showed the investment disadvantages of convertible bonds, namely, the risk of fluctuation of stock price, the risk of interest lost, the risk of early redemption, risk of coercion and interest rate risk. Although there exist risks, in fact, it does not involve the risk of loss of principal, which is a good investment target with low investment risk.When we invest in convertible bonds, it meanly includes the problem about valuations of convertible bonds and investment strategies. This paper sketches the basic evaluation ways of convertible bonds. And it also expounds how to select different kinds of convertible bonds according to different investment goals in real investment. The paper has some meanings for real investment to learn.At present, although the scale of the convertible bonds is small in our country, its advantages have been acknowledged by quite a number of investors and has a fairly stable investment group. However, China’s convertible bond market is not perfect. Therefore, we can learn from the experience of the mature market and promote the rapid and stable development of the convertible bond market in the future. Through the expansion of the investment varieties and the improvement of the transaction mode, China’s convertible bonds market will have a broad space for development.