convertible arbitrage definition

convertible arbitrage

Trading strategy in which a long position is established by purchasing an undervalued convertible security (bond or preferred stock) and is hedged by establishing a short position in the underlying stock for which the convertible security is exchangeable. Its objective is to profit from the relative pricing inefficiencies between the underlying stock and the convertible security. Also called convertible hedge.

convertible arbitrage is in the Disaster Planning & Risk Management, Investing and Securities & Futures Trading subjects.

convertible arbitrage appears in the definition of the following term: convertible hedge

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