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Finance

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  • January 4, 2022
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Percentage Premium

The difference between the bond’s price and its equity value or parity, expressed as a percentage:

Premium = (convertible price- parity) /parity

Premium = (convertible price/ parity) – 1

For example, the percentage premium on a convertible bond whose par value is $1,000 and parity is 80% of par (i.e., $800) would be:

% premium = (1000/800)- 1 = 25%


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