Conversion Option

Conversion Feature

The ability to change from one investment vehicle to another. For example, one may be able to switch between mutual funds in a fund family without incurring a penalty. Likewise, one may exchange a convertible bond to common stock in the issuing company. Sometimes, one even may be able to change an adjustable-rate mortgage into a fixed-rate mortgage. All of these examples describe a conversion feature on the investment vehicles.

Conversion Option

The option to convert an ARM to an FRM at some point during its life.

See Adjustable Rate Mortgage (ARM)/Convertible ARMs.