Black economy and Conversion premium: Difference between pages
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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 = £0.50) / £2.00 | |||
= 25%. | |||
== See also == | |||
* [[Conversion price]] | |||
* [[Convertible bonds]] |
Revision as of 13:16, 15 March 2015
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 = £0.50) / £2.00
= 25%.