Exchangeable bond
Exchangeable bond is a type of hybrid security consisting of a straight bond and an embedded option to exchange the bond for the stock of a company other than the issuer at some future date and under prescribed conditions. An exchangeable bond is different from a convertible bond. A convertible bond gives the holder the option to convert bond into shares of the issuer.
The pricing of an exchangeable bond is similar to that of convertible bond, splitting it in straight debt part and an embedded option part and valuing the two separately.