Conversion premium: Difference between revisions

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


For example, say the current market price of the ordinary shares is £2, and the conversion price is £2.50.  The conversion premium = [£2.50 - £2.00 = £0.50]/£2.00 = 25%.
 
'''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 ==
== See also ==
* [[Conversion price]]
* [[Conversion price]]
* [[Convertible bonds]]
* [[Convertible bonds]]
* [[Premium]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Latest revision as of 17:54, 29 December 2022

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