Also known as a convertible note or convertible debenture, a convertible bond is a type of debt instrument that can be converted into another security, usually shares of stock, of the issuing company, usually at some pre-announced ratio based on a fixed number of securities and a set price. It is a hybrid security with debt and equity-like features. Although it typically has a low coupon rate, the holder is compensated with the ability to convert the bond to common stock, usually at a substantial discount to the stock's market price.