Conversion premium

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The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares.


Example

The current market price of ordinary shares is £2.

The conversion price is £2.50.


The conversion premium is given by:

= (2.50 - 2.00) / 2.00

= 0.50 / 2.00

= 25%.


See also