What is the cost of conversion?

Conversion Prices relate to the prices related to different types of convertible securities. The convertible security concerned may be preferred by shares or bonds issued by the company. Within access to the transformation of the price, these types of securities may be transferred to a ordinary share if a set of circumstances occurs.

Within the total purchase structure for security, the cost of the conversion is determined at the time of the release. The exact details of the gear price will appear in one of two different documents depending on the type of security. With the preferred share of shares, the information will be given in the body of the security prospectus. If the security person is a problem with a convertible bond, the details will be included in the bond offset. In most countries, there are no provisions for adding conversion prices for action or bond events after reality.

in the total number of initial purchasing, the cost of conversion helps nAstavate several circuits that get into the game. The conversion price will often play a role in deciding how many shares can be accepted in the purchase. This is usually achieved by taking into account the fundamental security value and the division of this number considered by the price of the conversion.

In general, the price of the conversion is determined by the share rate that is higher than the current unit price on the open market. The reason is related to the fact that the cost of conversion is often used if there is a expectation that shares distribution can be offered in a short period of time. The price transformation scheme can also be set in a place if the shares are expected to significantly increase the value in a reasonable period of time. In both scenarios there is a higher purchase price, which is invested at the time of the acquisition, is compensated by high returns that are realized later.