A bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Convertibles are sometimes called "CVs".

Investopedia Says:
Issuing convertible bonds is one way for a company to minimize negative investor interpretation of its corporate actions. For example, if an already public company chooses to issue stock, the market usually interprets this as a sign that the company's share price is somewhat overvalued. To avoid this negative impression, the company may choose to issue convertible bonds, which bondholders will likely convert to equity anyway should the company continue to do well.

From the investor's perspective, a convertible bond has a value-added component built into it; it is essentially a bond with a stock option hidden inside. Thus, it tends to offer a lower rate of return in exchange for the value of the option to trade the bond into stock.

Related Links:
Find out how businesses weigh the pros and cons of convertible bonds as an alternative form of financing. Why Companies Issue Convertible Bonds
Read on to find out how your business can get the money it needs - even when the bank says "no". 7 Unconventional Ways Businesses Can Borrow Money
Find out how you can maintain your income stream by using this type of bond strategy. Leverage Your Returns With A Convertible Hedge
Find out about the nuts and bolts, pros and cons of investing in bonds. Convertible Bonds: An Introduction
Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration. Advanced Bond Concepts
Mandatory convertibles are a little understood security with some distinct advantages. Find out if they are right for you. The Mandatory Convertible: A "Must Have" For Your Portfolio?

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