In finance, a convertible [[bond|Bonds]] is an asset the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. An Automatic Convertible Bond has some unique properties:
* The holder of an ACO would get at an upfront agreed discount at the initial product offering ([[IPO]])
* The holder gets a guarantee to get the stock
* The holder gets a minimum buying price or a maximum price.

ACO was discussed in the MBI training in the context of the [[Lernout and Hauspie Speech Products case|M10-S2 - Case - Lernout and Hauspie Speech Products]]. As there is a minimum and a maximum scenario the holder of an ACO has a significant uplift or downlift. The reason for including this range is to communicate an expected price for the IPO.

<<AudioFragment /static/files/MBI/Module%2010/M10-S2%20-%20Explanation%20ACO.mp3>>
See also: http://en.wikipedia.org/wiki/Convertible_bond
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mbi_public
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Thu, 04 Nov 2010 14:35:18 GMT
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dirkjan
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Thu, 04 Nov 2010 14:35:18 GMT
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dirkjan
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M10
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dirkjan