
[After the racetrack near ASCOT.]
An option on a convertible bond that is used to separate a convertible bond into its two components: 1) a bond and 2) an option to acquire stock. When the bond is stripped of its conversion feature, the holder has a bond featuring fairly stable returns on debt, and a volatile - but potentially very valuable - option.
Investopedia Says:
Increasingly, ASCOTs are being bought and sold by hedge funds employing convertible arbitrage strategies to increase their portfolios' leverage. Often, the bond component is broken down into small denomination bonds and sold to individual investors, while the option component is retained if the investor anticipates share price appreciation.
Related Links:
Find out about the nuts and bolts, pros and cons of investing in bonds.
Convertible Bonds: An Introduction

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Ascot (or Ascott) is Anglo Saxon in origin, and means 'eastern cottage'.
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