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, Share bond or rather share? | Specials advertorials, Forex-News, Forex-News
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Share bond or rather share? | Specials advertorials

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, Share bond or rather share? | Specials advertorials, Forex-News, Forex-News


, Share bond or rather share? | Specials advertorials, Forex-News, Forex-News

Share bond or rather share?

Reverse Convertible Bonds are particularly attractive to investors due to their high yield, the risks also seem manageable: the investment period is limited to a few months or years and at the end of the term investors receive a fixed number of shares, if not a repayment of the capital invested . The following points should show whether reverse convertibles are really a simple and profitable investment for investors or whether a direct purchase of the underlying is no longer worthwhile.

risk

There is an issuer risk with Reverse Convertibles. If the issuer of the Reverse Convertible suffers insolvency and is insolvent, the Investor in the Reverse Convertible loses its capital regardless of the development of the Underlying and is also left empty-handed in the agreed interest payments.

chance

Especially when the market tends to move sideways or yields only slightly, Reverse Convertibles are a worthwhile investment, as they can be used to generate a not insignificant profit in this market environment, whereby a direct investment in shares would not generate a profit.

risk

With a reverse convertible bond, investors miss the dividend payments that they could have received in the case of a direct investment in the underlying.

chance

Reverse Convertibles offer an above-average, often double-digit interest rate, which investors always receive. A similarly high and guaranteed interest rate cannot be achieved with any other financial product.

risk

If the price of the underlying is quoted below the base price on the valuation day, the investor does not get back the final amount, but shares whose value is below it. The lower the price of the underlying is below the base price, the lower the value of the bond redemption.

chance

Even if the Reverse Convertible Bond is redeemed through the delivery of shares, this does not necessarily mean a loss for the investor. The high interest payments act as a loss buffer that a direct investment would not have offered. If the price of the underlying is not too low, the investor has still made a profit on the delivery of shares if he includes the interest payments.

risk

If the price of the underlying falls drastically during the term and is listed at zero on the valuation day, the purchaser of the Reverse Convertible will suffer a total loss of his capital invested. Only the interest earned remains.

chance

Even if the interest payments are not sufficient to compensate for losses in the underlying, the investor who has invested in an equity bond is still better off at the end of the term than the investor who has made a direct investment in the underlying share. Because if the interest payments are taken into account, the holder of the Reverse Convertible has suffered a smaller loss than would have been the case with a direct investment in the Underlying. In contrast, both benefit in the same way from further developments in the underlying.

risk

Profits are capped. In the case of a reverse convertible bond, the investor receives a maximum of the nominal value of the reverse convertible bond used. So he does not benefit from price increases of the underlying, while he bears the full loss in the case of price declines. In the case of a longer upward movement, holders of Reverse Convertibles only watch while investors make profits in a direct investment.

chance

An investment in a Reverse Convertible Bond can also be worthwhile if the price of the underlying increases. A direct investment in the share only makes sense if the price gains are greater than the amount that the investor receives from the return on the Reverse Convertible. With moderate price increases, the investment in the Reverse Convertible pays off.



, Share bond or rather share? | Specials advertorials, Forex-News, Forex-News

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, Share bond or rather share? | Specials advertorials, Forex-News, Forex-News

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