Enter the par value of the convertible bond and the share price into the calculator to determine the conversion ratio.
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Conversion Ratio Formula
The following formula is used to calculate the conversion ratio on a bond.
CR = PV / SP
- Where CR is the conversion ratio
- PV is the par value of the convertible security/bond
- SP is the conversion price of the equity or share price
To calculate a conversion ratio, divide the par value of the bond by the conversion price of the equity or the share price.
Conversion Ratio Definition
A conversion ratio is defined as the ratio of the par value of the convertible security to the price of the equity or share.
Conversion Ratio Example
How to calculate a conversion ratio?
- First, determine the par value.
Calculate or determine the par value of the security.
- Next, determine the conversion price.
Calculate the conversion price of the equity.
- Finally, calculate the conversion ratio.
Calculate the conversion ratio using the equation above.
FAQ
What is a par value?
A par value is the face value of a bond.
