What is a conversion bonus?

The

conversion premium is understood as a percentage or amount of the dollar that the current cost of convertible security is more than the amount that is made by the transformation of security into the ordinary share. Investors often check the current state of any convertible investment in the portfolio and determine whether such conversion would be in their best interest at the moment. Depending on the circumstances, conversion bonuses may be quite healthy, so it is wise to convert for the investor.

At the same time, the calculation of conversion bonuses may indicate that time is not correct to perform such a conversion. Basically, when the current market value of the ordinary shares in question is at a price that is lower than the percentage that is currently associated with convertible security, the investor is wise to do nothing. The decision to engage in the transfer of supplies from the convertible of securities is considered to be the time of time and would lead to the loss of the investor.

There are several factors that can affect intoLAR or percentage of conversion bonuse. Some of them have to do with the type of convertible security itself and how such factors such as the current transaction costs or the duration of the proposed conversion option. In other situations, the size of common dividends can affect the conversion bonus in a positive or negative way.

It should be noted that it is not unusual that most convertible securities are traded at a price or rate that is higher than the conversion value. However, this is not automatically. Sudden market changes and several closely related factors to the nature of their own safety may indicate that the forwarding procedure with conversion would not currently be in the best interest of the investor. The investors would be well recommended that they always calculate the conversion bonus before moving forward with the conversion.