Convertibles. No, we're not talking about the Dodge Viper that you've been eyeing at the local car dealership. Convertible bonds are simply bonds that can be later converted into stock.

Convertible bonds are bonds issued by a company that are convertible into common stock. Like all bonds, they also provide a yield (interest). However, this yield is also slightly lower than most corporate bonds (bonds issued by a company) offer. The current average yield is about 4%.