Warning: Creating default object from empty value in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/plugins/independent-core/admin/ReduxCore/inc/class.redux_filesystem.php on line 29 Conversion Ratio – Fincyclopedia
[wpdreams_ajaxsearchpro id=44 ]
  • Monday, April 28, 2025
  • The Financial Encyclopedia
[wpdreams_ajaxsearchpro id=43 ]

Finance

  Finance   |   Terms
  • 721
  • May 17, 2021
[addtoany]
Notice: Undefined variable: myString in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/themes/independent/template-parts/post/content-single.php on line 41

Conversion Ratio

With respect to convertible bonds (and also convertible preferred stocks), it is the number of shares of common stock in which each bond can be exchanged. This ratio helps determine the strike price of a convertible as follows:

Strike price = bond par value/ conversion ratio

Also it is used to find out the conversion value (or parity value) of a convertible based on the following formula:

Conversion value = stock price x conversion ratio

In calculation, conversion ratio is given by dividing the face value of a convertible by conversion price:

Conversion ratio = face value/ conversion price

For example, if the conversion price is $50 per share and the face value of a bond is $1,000, then the holder would receive 20 shares for each bond:

Conversion ratio = 1,000/50 = 20 shares

The conversion ratio is also known as a conversion rate.


[related_posts_by_tax title="See also" posts_per_page="10" taxonomies="post_tag"]

[pt_view id=473cba234b]
[su_box title="Watch on Youtube" style="soft" box_color="#f5f5f5" title_color="#282828" radius="2" class="" id=""][su_row class=""][su_column size="1/1" center="yes" class=""] [/su_column][/su_row][/su_box]

Latest Terms

Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments

    Leave Your Comment

    Your email address will not be published.*