Important Features

Short-Term Investment
Reverse convertibles are typically issued with maturities that range from six months to two years.

High Coupon
They are typically issued with above market rate coupons that could range from 8% to 15% per annum.

Predictable Income
The coupon is paid regardless of whether the investor receives cash or shares of stock at maturity.

Not Principal Protected
At maturity, investors may receive securities worth less than their original investment amount.

Low Minimum Investment
Some, but not all, reverse convertibles can be purchased for a minimum investment of $1,000 and in increments of $1,000 thereafter.

Liquidity
Most issuers of reverse convertibles intend to maintain a secondary market in notes they have issued, although they are not obligated to do so. If the investor sells their security prior to maturity, it may be worth less or more than the original amount invested.