Hello friends, today’s article is in chapter 16 of the intelligent investor book. in chapter 16, we see the convertible issues and warrants, and how they benefited investors, this is all information provided in chapter 16 of the intelligent Investor book.
Convertible Issues and Warrants: Intelligent Investor: Chapter 16
Convertible issues and warrants are types of financial instruments. These instruments are sold by the company to investors for increasing funds.
- Convertible Issues: This is a type of bond which have the facility to convert the bond into a share. These convertible issues are helpful when you buy the bonds of the company. This bond can be converted into stocks when the stock price increases. This is one benefit of convertible issues. But, there is one thought that remains. If you know the stock price is increasing. why should you buy, these convertible issues? This convertible issue gives you a consistent minimum interest. And also has a high price for convertible issues. (Intelligent Investor: Chapter 16)
- Warrants: Warrants are a type of stock option, so Benjamin gram criticizes convertible issues and warrants.
If the company has maximum warrants then you should stay away from that company. This type of company takes advantage of investor money for stupid financial instruments. If you invest in any company, then you have to decide which one you should buy is stocks or bonds. If you want the minimum return, then buy the bonds and if you want the maximum return then buy the stocks. This all decides on the company analysis, in this analysis you should read the notes of the company and financial statements.
Benjamin gram said,” Convertible issues and warrants are the worst of worlds” other things are that if you want to invest then diversify your portfolio in Cash, straight bonds, Domestics stocks, and foreign stocks.
So the salesman of convertible issues and warrants says,” this is the best in the world”. Because they have a big commission on that instrument so be an intelligent investor by staying away from this type of investment.
This is all about chapter 16 Convertible issues and warrants in The intelligent investor book.
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