Business and Personal Finance Dictionary

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• CONVERTIBLE CAB
  
  A convertible capital appreciation bond is a bond which compounds interest (as a CAB does) for a fixed period of time, usually between 5 and 10 years, and then pays interest periodically like a normal serial or term bond. The conversion date is the final compounding date for the accretion period at which time the bond begins to accrue and pay interest on a semiannual basis. Convertible CABs usually accrete to an integral $1000 or $5000 denomination at the conversion date. See also Capital Appreciation Bond.
  
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