Conversion premium

Conversion premium,

Definition of Conversion premium:

  1. Convertibles are securities, such as bonds and preferred shares, that can be exchanged for a specified number of common shares at an agreed-upon price. When convertible bonds mature, they can be redeemed at their face value or at the market value of the underlying common shares, whichever is higher. Convertibles can be converted at the option of the investor, or the issuing company can force the conversion.

  2. A 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. A conversion premium is expressed as a dollar amount and represents the difference between the price of the convertible and the greater of the conversion or straight-bond value.

  3. Amount or percentage by which the price of a convertible security exceeds current market value of the security into which it could be converted.

Meaning of Conversion premium & Conversion premium Definition