Question: What do you mean by poison puts?
Answer: Bonds with put provisions can have restriction on the amount that the bondholder may put back to the issuer/borrower on any one put date. Put options have been included in corporate bonds to have some unfriendly takeovers. Such put provisions called as “poison puts.�
Question: What is the difference between hard puts and soft puts?
Answer: You can classify put options as below - Hard puts: In this case bond must be redeemed by the issuer only for cash. - Soft puts: In this case, the issuer has the option to redeem the bond for cash, common stock, another debt instrument, or a combination of the three.
Question: what is the Convertible Debt/bond?
Answer: A convertible bond is can be exchanged for specified amounts of common/equity stock in the issuing firm/corporations. Also, please note that the conversion cannot be reversed. The most important terms are conversion ratio and conversion price.
Question: What is the conversion ratio, in case of convertible bond?
Answer: The conversion ratio is used to determine the number of shares of equity stock to which the investor has a claim.