Zero-coupon convertible security
Zero-coupon convertible security
Also refers to zero-coupon bonds, which are convertible into an interest bearing bond at a certain time before maturity.
Zero-Coupon Convertible Bond
2. A municipal bond that may be converted into a corporate bond in the company issuing it. A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible options may or may not become worthwhile, depending on how the companies they represent are performing. These zero-coupon convertibles are tax-exempt, but are convertible to other bonds that may yield more.