What Is a Conversion Value?

The conversion value is the product of the conversion ratio and the current price of the common stock. The relationship between the conversion value of convertible bonds and the market price of convertible bonds is an important basis for the valuation analysis of convertible bonds. There are many factors that determine the relationship between the two, the most important of which is the common stock price of the joint stock company. [1]

Conversion value

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The conversion value is the product of the conversion ratio and the current price of the common stock. The relationship between the conversion value of convertible bonds and the market price of convertible bonds is an important basis for the valuation analysis of convertible bonds. There are many factors that determine the relationship between the two, the most important of which is the common stock price of the joint stock company. [1]
When the price of common stock rises and the conversion value of the convertible bonds is higher than the price of the convertible securities (market price), convert the bonds into stocks and sell the underlying stocks to get the spread income. When ordinary stock prices fall and the conversion value of convertible bonds is lower than their market value, holding bonds is advantageous. Therefore, the relationship between the two and their changes is an important basis for investors to decide whether to hold convertible bonds or ordinary shares. [1]

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