Convertible Debenture

Ah...a debenture with the added feature of being able to open up the top and feel the breeze when you hit the road.

Okay...actually, its a specific kind of convertible bond.

We could make you click over to the convertible bond definition, but we'll go easy on you. Here's a quick rundown: a convertible bond is a bond that can get turned into stock. When an investor first buys it, the security acts like a bond. There's an interest rate and a maturity. But there's also the option for the investor to turn the security into a certain number of shares of the company's stock.

These investment vehicles allow people to take advantage of a higher stock price, if shares actually go up. But if the stock price doesn't go anywhere (or declines), they get paid off by the bond.

So...a convertible debenture is a specific form of convertible bond. The debenture form is unsecured. Which means it's not backed by any assets (like your credit card debt). So if a company goes into bankruptcy, the convertible debenture holders would be at the back of the line of creditors who would get paid.