Types

• Convertible debt is used in mortgages and other types of securities. It can often be used for converting bonds to shares of stock or to other bonds.
  
  

Factors

• The value of a convertible debt, when referring to bonds, is determined by several factors. The value is determined by using the coupon rate of the bonds, credit quality of issuer, length of time to maturity, call provision and market rates of interest.
  
  

Results

• Convertible bond debt is equal to the current value of the cash flows of coupon rates as well as the face value of the bond at maturity. The value also takes into consideration a discounted rate of interest that includes a premium risk of investment. The value of these bonds fluctuate as interest rates change. When interest rates increase, convertible debt prices decrease. When interest rates decrease, convertible debt prices increase.