Hello there Why do Convertibles in gereral provide higher income than Ordinary share even though it gives the opportunity to convert into shares? Anyone please help! Thanks!
Convertibles generally (ie not always) provide higher income than ordinary shares. You might consider this as follows. Convertibles should appeal to similar types of investors that want to buy shares, as the convertible "turns into" a share in the end. If the share offered higher income than the convertible in the short term, then investors might just buy the share now, and not bother with the convertible at all, as the long run position would be the same, but the investor would benefit from higher income in the short term. So the higher income on convertibles could be to make them more appealing.
