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Conversion Ratio Formula

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Conversion Ratio is calculated by dividing the par value of the convertible bond by the conversion price. Check FAQs

CR = \frac{P vm}{CP equity}

CR - Conversion Ratio?P_vm - Par Value at Maturity?CP_equity - Conversion Price of Equity?

Conversion Ratio Example

With values

With units

Only example

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

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

Here is how the Conversion Ratio equation looks like.

2 = \frac{1100}{550}

2 = \frac{1100}{550}

2 = \frac{1100}{550}

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Conversion Ratio Solution

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

FIRST Step Consider the formula

CR = \frac{P vm}{CP equity}

Next Step Substitute values of Variables

∴

CR = \frac{1100}{550}

Next Step Prepare to Evaluate

∴

CR = \frac{1100}{550}

LAST Step Evaluate

∴

CR = 2

Conversion Ratio Formula Elements

Variables

Conversion Ratio

Conversion Ratio is calculated by dividing the par value of the convertible bond by the conversion price.

Symbol: CR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Conversion Ratio

Par Value at Maturity

Par Value at Maturity is the amount of money that the issuer promises to repay bondholders at the maturity date of the bond.

Symbol: P_vm

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Par Value at Maturity

Conversion Price of Equity

Conversion Price of Equity is the price per share at which a convertible security, such as corporate bonds or preferred shares, can be converted into common stock.

Symbol: CP_equity

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Conversion Price of Equity

Other formulas in Fixed Income Securities category

Go Conversion Value

CV = P \cdot CR

Go Conversion Premium

CP = CV - MP CB

Go Floating Interest Rate

FIR = R ref + FS

Go Convexity Adjustment

CA = BC \cdot ({Δy}^{2}) \cdot 100

How to Evaluate Conversion Ratio?

Conversion Ratio evaluator uses Conversion Ratio = Par Value at Maturity/Conversion Price of Equity to evaluate the Conversion Ratio, The Conversion Ratio is the number of common shares received at the time of conversion for each convertible security. Conversion Ratio is denoted by CR symbol.

How to evaluate Conversion Ratio using this online evaluator? To use this online evaluator for Conversion Ratio, enter Par Value at Maturity (P_vm) & Conversion Price of Equity (CP_equity) and hit the calculate button.

FAQs on Conversion Ratio

What is the formula to find Conversion Ratio?

The formula of Conversion Ratio is expressed as Conversion Ratio = Par Value at Maturity/Conversion Price of Equity. Here is an example- 2.2 = 1100/conversion_price.

How to calculate Conversion Ratio?

With Par Value at Maturity (P_vm) & Conversion Price of Equity (CP_equity) we can find Conversion Ratio using the formula - Conversion Ratio = Par Value at Maturity/Conversion Price of Equity.

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Conversion Ratio Formula

Conversion Ratio Example

Conversion Ratio Solution

Conversion Ratio Formula Elements

Other formulas in Fixed Income Securities category

How to Evaluate Conversion Ratio?

FAQs on Conversion Ratio

Variable Name