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Conversion Premium Formula

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Conversion Premium is an amount by which the price of a convertible security exceeds the current market value of the common stock into which it may be converted. Check FAQs
CP=CV-MPCB
CP - Conversion Premium?CV - Conversion Value?MPCB - Market Price of Convertible Bond?

Conversion Premium Example

With values
With units
Only example

Here is how the Conversion Premium equation looks like with Values.

Here is how the Conversion Premium equation looks like with Units.

Here is how the Conversion Premium equation looks like.

5Edit=100Edit-95Edit
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HomeIcon Home » Category Financial » Category Fixed Income Securities » fx Conversion Premium

Conversion Premium Solution

Follow our step by step solution on how to calculate Conversion Premium?

FIRST Step Consider the formula
CP=CV-MPCB
Next Step Substitute values of Variables
∴ CP=100-95
Next Step Prepare to Evaluate
∴ CP=100-95
LAST Step Evaluate
∴CP=5

Conversion Premium Formula Elements

Variables
Conversion Premium
Conversion Premium is an amount by which the price of a convertible security exceeds the current market value of the common stock into which it may be converted.
Symbol: CP
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Conversion PremiumOpen Variable
Conversion Value
Conversion Value is the amount an investor would receive if a convertible security were changed into common stock.
Symbol: CV
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Conversion ValueOpen Variable
Market Price of Convertible Bond
Market Price of Convertible Bond is how much someone will pay for the bond on the free market.
Symbol: MPCB
Measurement: NAUnit: Unitless
Note: Value should be greater than 0.
Formulas to find Market Price of Convertible BondOpen Variable

Other formulas in Fixed Income Securities category

​Go Conversion Ratio
CR=PvmCPequity
​Go Conversion Value
CV=P⋅CR
​Go Floating Interest Rate
FIR=Rref+FS
​Go Convexity Adjustment
CA=BC⋅(Δy2)⋅100

How to Evaluate Conversion Premium?

Conversion Premium evaluator uses Conversion Premium = Conversion Value-Market Price of Convertible Bond to evaluate the Conversion Premium, The Conversion Premium is the premium the bondholder will have over the conversion value. Conversion Premium is denoted by CP symbol.

How to evaluate Conversion Premium using this online evaluator? To use this online evaluator for Conversion Premium, enter Conversion Value (CV) & Market Price of Convertible Bond (MPCB) and hit the calculate button.

FAQs on Conversion Premium

What is the formula to find Conversion Premium?
The formula of Conversion Premium is expressed as Conversion Premium = Conversion Value-Market Price of Convertible Bond. Here is an example- 5 = 100-95.
How to calculate Conversion Premium?
With Conversion Value (CV) & Market Price of Convertible Bond (MPCB) we can find Conversion Premium using the formula - Conversion Premium = Conversion Value-Market Price of Convertible Bond.
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