Conversion Ratio

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DEFINITION of 'Conversion Ratio'

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

 

Conversion Ratio

INVESTOPEDIA EXPLAINS '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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