Abstract
The first part of this chapter examines convertible securities, such as zero-coupon convertibles and mandatory convertibles. The second part of the chapter focuses on Wall Street innovation. Investment banks are creative in achieving the varying objectives of both their issuing and investing clients. New forms of securities must take into account not only client economic priorities but also consider legal, tax, accounting, and political issues. All large investment banks have new product development teams that work with internal and outside advisors, including lawyers, accountants, tax experts, and regulatory experts. Although some of the most innovative products are developed in the convertible securities market, there have been many other successful products developed in other areas, including structured finance, municipal securities, pension funds, M&A, and others. Two examples of investment banking product innovations are discussed in this chapter: Nikkei put warrants and accelerated share repurchase programs.
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