Convertibles

Convertibles are an easy way to jack up the cost of auto insurance. They’re shiny, red, and go really fast. And they’re pretty common in really bad stories that start with “A Florida man.”

But that has nothing to do with finance…

In finance, convertibles refer to securities that can be turned into common stock later. These securities include preferred stock or convertible bonds. Typically, investors think that debt and equity are the only ways to invest (a.k.a. bonds and stocks). However, convertibles are a hybrid of these two, as investors have ways to effectively hedge against the downside to both flavors of investments.