Convertible bonds are a type of corporate bond that gives the bondholder the option to convert the bonds into a pre-determined number of shares of the underlying common stock.

They combine features of both debt and equity instruments, providing the potential for capital appreciation while offering regular interest payments and the return of principal upon maturity.

The usual maturity of a convertible bond is 3-5 years.

Key features/components:

1. Coupon payments: interest payments typically paid semi-annually.

2. Conversion ratio: the number of shares each bond can be converted into.

3. Conversion price: the price at which the bond may be converted into stock, derived from the conversion ratio.

4. Maturity date: the date when the principal amount is due for repayment if it has not been converted.

5. Conversion period: the timeframe during which the bondholder can convert the bond into shares.