Conversion value

Conversion value is the current market value of the assets for which a convertible security can be swapped. Conversion value can be calculated by multiplying the number of common shares obtainable through a conversion by their market price. For example, if a convertible bond can be swapped for ten shares of common stock and the market price of the common stock is $95, then the conversion value of the bond is $950. A high conversion value makes it financially worthwhile to swap a convertible instrument for common stock.

Related Courses

Accounting for Investments 
Corporate Finance 
Treasurer's Guidebook