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Conversion Parity

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Conversion parity
See: Market conversion price
conversion parity
The condition of a convertible security when it sells at a price equal to the value of the underlying asset into which it may be exchanged.
Conversion Parity
The price one pays for common stock when one exercises the conversion option of a convertible security. One calculates the conversion parity price by dividing the price one paid for the convertible security by the conversion ratio, which is the number of shares of common stock one receives by exercising the conversion option. In order for the exercise of the option to be worthwhile, the conversion parity price must lower than the market price of common stock. It is also called the market conversion price.


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