Conversion Bond Formula

Topics: Stock, Convertible bond, Finance Pages: 1 (253 words) Published: December 7, 2012
Conversion ratio# of shares that can be exchanged for one convertible bond| Par value of bond/ conversion price| Conversion pricePrice per share that determine the number of share you will received| Par value of bond/conversion ratio| Conversion value – an indication of what a convertible issue would trade for if it were priced to sell on the basis of its stock value.| Conversion ratio x market price of stock| Conversion premium ( in $)It is difference between the market price of the convertible bond and the higher of its security value and its conversion value * Use it if market price of convertible bond is given| Market price of convertible bond – conversion value| Conversion premium (in $) - Use it if market price of convertible bond is not given| Par value – conversion value| Conversion premium (in $)- Use it if market price of convertible bond is not given| Conversion price – market price of stock| Conversion premium (%) | Conversion premium (in RM)/conversion value| Conversion premium (in %)| Conversion price – market price of common stock/market price of common stock| Value of straight bond ( security value)It Is the value of the convertible without conversion feature. Thus, calculated as straight bond.| CP(PVIFA %,n) + Par value (PVIF,% n)| Payback period| Conversion premium/(annual interest payment from the convertible bond – annual dividend income from the underlying common stock)| Conversion parityThe price at which the common stock would have to sell in oder to make convertibke security worth its present market price. Aka conversion equivalent.| Market price of convertible bond/conversion ratio|
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