What is the main difference between conventional and convertible bonds?

The main difference between conventional and convertible bonds lies in the feature of conversion that convertible bonds offer. Convertible bonds allow investors the option to convert their bonds into a specified number of shares of the issuing company's stock at predetermined prices. This conversion feature provides potential for capital appreciation if the company's stock performs well, making convertible bonds an attractive investment for those seeking both income and growth opportunities.

In contrast, conventional bonds do not have this conversion feature; they are simply debt instruments that pay interest over a fixed period and return the principal at maturity. The flexibility and potential for upside gain through stock conversion are key advantages that distinguish convertible bonds from their conventional counterparts.