Abstract
During the vigorous development of convertible bonds in China, it has become a hot investment product recently. This paper introduces the investment methods and risks of convertible bonds to investors with various risk tolerance through the explanation of the background and important clauses. Convertible bonds, as a combination of creditor’s rights and options, can be said to be applicable to all kinds of investors at the same time. Investors with low risk tolerance can obtain fixed income regardless of market conditions under the condition that they have stable and low-risk coupon rate as guarantee. Investors with high risk tolerance can obtain returns with greater risks and greater returns through stock conversion under the same stable fixed income background. Under the protection of many important clauses (the specific clauses are as follows), the interests of various types of investors are stabilized. At the same time, this paper also puts forward several investment suggestions according to the risks of convertible bonds.
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