Glossary
Asset swap. An exchange of cash flows between two parties.
Basis trades. The purchase of a government bond and the simultaneous sale of futures contracts on that bond.
Bearish hedge. Sometimes known as a short-biased hedge. Occurs when a convertible arbitrageur sells short more shares than are required to maintain neutrality for movements in the price of the underlying stock.
Bullish hedge. Sometimes known as a long-biased hedge. Occurs when a convertible arbitrageur sells short fewer shares than are required to maintain neutrality for movements in the price of the underlying stock.
Busted convertibles. Convertible bonds trading well below par value, at or near their investment value.
Call feature. A feature that allows the issuer to ...
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