What Is a Convertible ARM? A convertible ARM is an adjustable-rate mortgage (ARM) that gives the borrower the option to convert to a fixed-rate mortgage after a specified period of time. Convertible ARMs are marketed as a way to take advantage of falling interest rates and usually include specific conditions. The financial institution generally charges
What Is a Convertible Bond? A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond’s life and is usually at the discretion
What Is a Convertible Debenture? A convertible debenture is a type of long-term debt issued by a company that can be converted into shares of equity stock after a specified period. Convertible debentures are usually unsecured bonds or loans, often with no underlying collateral backing up the debt. These long-term debt securities pay interest returns
What Is a Convertible Subordinate Note? A convertible subordinate note is a short-term debt security issued by a company that can be exchanged for its common stock at the discretion of the bondholder. It is a short-term convertible bond, but which ranks below other, more senior loans (it is junior to other debt). In the
What Is Convexity? Convexity is a measure of the curvature, or the degree of the curve, in the relationship between bond prices and bond yields. Convexity is thus a measure of the curvature in the relationship between bond prices and interest rates. It reflects the rate at which the duration of a bond changes as
What Is a Conveyance? The term conveyance refers to the act of transferring property from one party to another. The term is commonly used in real estate transactions when buyers and sellers transfer ownership of land, building, or home. This is done using an instrument of conveyance—a legal document such as a contract, lease, title
What Is a Conveyance Tax? Conveyance tax is a tax imposed on the transfer of real property at the state, county, or municipal level. This tax is generally calculated as a percentage of the sale price. If the property is sold for a very low amount or is transferred for free, such as between family
What Is a Chief Operating Officer (COO)? The chief operating officer (COO) is a senior executive tasked with overseeing the day-to-day administrative and operational functions of a business. The COO typically reports directly to the chief executive officer (CEO) and is considered to be second in the chain of command. In some corporations, the COO
What Are Cookie Jar Reserves? Cookie jar reserves are savings from previous quarters that a company records as earnings in subsequent quarters to make it appear that its earnings were higher than they really were. When a company fails to meet its earnings target, a company accountant can dip into the cookie jar to inflate
What Is ‘Cook the Books’? Cook the books is a slang term for using accounting tricks to make a company’s financial results look better than they really are. Typically, cooking the books involves manipulating financial data to inflate a company’s revenue and deflate its expenses in order to pump up its earnings or profit. Key
