convertible

Definition

In finance, a security that's having an identity crisis—it starts as one thing (usually a bond) but can transform into something else (usually stock) like a financial Transformer. Investors love them because they get the safety of debt with the upside potential of equity. It's also a car with a roof that comes off, but that's significantly less exciting to accountants.

Example Usage

The startup offered convertible notes to early investors, promising them either their money back or a piece of the unicorn dream.

Source: Investment terminology

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materiality threshold

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Liquidity

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shadow banking

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futures

Financial contracts obligating parties to buy or sell assets at predetermined future dates and prices, essentially allowing traders to bet on tomorrow's commodity prices today. These derivatives let farmers hedge against price drops and speculators gamble on market movements without ever touching an actual bushel of wheat. The futures market adds liquidity and price discovery to markets while giving financial news anchors something to dramatically discuss at market close.

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credit default swap

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duty-free

Products sold without government taxes at airports and border zones, creating the illusion of amazing deals while you're trapped in transit. The magical land where alcohol and perfume become 'affordable' because customs duties don't apply. Convinces travelers they're saving money while spending it on things they didn't need in the first place.

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