What is a Conversion Premium?
Conversion premium refers to the part where the conversion price exceeds the conversion value of the convertible bond (the value of the convertible bond converted at the current price of the underlying stock).
Conversion premium
Right!
- Chinese name
- Conversion premium
- C r
- Stands for conversion premium rate
- C p
- Representing conversion premium
- V
- Represents conversion price
- Conversion premium refers to the part where the conversion price exceeds the conversion value of the convertible bond (the value of the convertible bond converted at the current price of the underlying stock).
- Among them: Cp represents the conversion premium; Vm represents the market price of convertible corporate bonds; V represents the conversion price. [1]
- It should be noted that the conversion premium is the general experience of countries with mature capital markets. It includes the option characteristics of bonds. However, in China, where the capital market is in its infancy, this option characteristic of convertible corporate bonds cannot High expectations. In the experimental stage of issuing convertible corporate bonds, in order to ensure the success of the issuance and conversion of this financial product, the conversion premium must be as low as possible and as close as possible to the stock price at the time of bond issuance. For some issuing companies, the issuance of convertible corporate bonds may even be lower than the stock price at the time.