• Lower Yield: convertible bond offers lower yield than the straight bond of similar quality because they have the option to convert.
• Conversion Premium: The conversion premium on convertible bonds is an addition premium that investor pay for the option to convert their bond into common shares of the issuers. This premium lower the yield on the bond.
• Dilution: when the convertible bond is converted into the common share, it increases the number of outstanding shares, which you be dilute by the existing shares.