Conversion
In the case of bonds, the – previously contractually stipulated change – in the terms and conditions, especially with regard to interest and redemption. – In the case of options, a special strategy, namely – the sale of a spot position, whereby – a purchase position for the same commodity is entered into on the futures market with part of the proceeds and – the remaining amount is invested in fixed-interest securities. The investor thus obtains income from the securities in the form of interest payments, which he can use when the forward contract is allocated. – However, whether this procedure is profitable for the investor depends on a number of variable variables, above all on the effective interest rate of the securities temporarily taken over. – In a broader sense, according to German transformation law, transformation means: – merger, – change of legal form, – transfer of assets and – split, the latter in turn in the form of spin-off, split-up and spin-off. – In a narrower sense, it also means a mere change of legal form (e.g. the conversion of BASF Aktiengesellschaft into a European Company, a Societas Europaea [SE]), without the previous company being dissolved or newly founded. – See bond, floating rate, Euro-bonds, floater, floor, mergers and acquisitions, conversion bond, option, merger.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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