A convertible security that may be exchanged into another convertible. The market price of the indirect convertible is actually a function of the value of the shares underlying the second convertible. As an example, a bond may be convertible into 10 shares of a convertible preferred stock, each of which may be exchanged for 5 shares of common stock. Thus, the bond trades indirectly on the basis of the value of 50 shares of common stock.
