In my May 14 column, which appeared when the recession's severity was still a big unknown, I recommended four convertible securities.

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Special Offer: Protect yourself from inflation with convertible securities and trust preferreds.

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Most convertible securities allow the buyer to convert into common stock at a fixed conversion price set at a modest premium to wherever the common is trading at the time the convertible security is issued.

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The new investors may buy convertible preferred securities, that is, bond-like equity with an option to change to a set number of common shares at an established price and at an exercise date in the future.

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In these deals, Ribotsky invested cash in thinly traded public companies, in return for securities convertible into discounted common shares, often causing the stock price to tumble.

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In these deals, Hicks would get securities that were convertible into discounted common shares of the companies in which he invested.

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The terms of the agreement may be equity, debt, convertible debt, or any other securities structure that the entrepreneur and investor agree to.

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In these deals NIR would provide cash to a publicly-traded company in exchange for a convertible debenture that entitled NIR to receive interest and repayment in the form of cash or discounted equity securities.

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