Conversion Ratio

What is the 'Conversion Ratio'

The conversion ratio is the number of common shares received at the time of conversion for each convertible security . It is calculated by using this formula:

 

Conversion Ratio

BREAKING DOWN 'Conversion Ratio'

The higher the ratio, the higher the number of common shares exchanged per convertible security . The conversion ratio is determined at the time the convertible security is issued and will have an impact on the relative price of the security.

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RELATED FAQS
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    Learn about busted convertible bonds; these are hybrid securities with conversion prices significantly higher than the market ... Read Answer >>
  2. What is a Chinese hedge?

    A Chinese Hedge is a form of arbitrage by which an investor shorts a convertible bond and buys the underlying common stock. ... Read Answer >>
  3. Why would a corporation issue convertible bonds?

    Discover how corporations issue convertible bonds to take advantage of much lower interest rates as a result of a conversion ... Read Answer >>
  4. What are 'death spiral' convertible bonds?

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