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Conversion Premium

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Conversion premium
The extent by which the conversion price of a convertible security exceeds the prevailing common stock price at the time the convertible security is issued. In general usage, the conversion premium is the amount by which the convertible security trades above its conversted value. For example, if a $1,000 par bond is trading at $1,100, it is convertible into 50 shares, and the shares are trading at $21, the converted value is 50 X 20.50 = $1,025, and the conversion premium is $75.
Conversion Premium
The amount by which a convertible security is trading above the common stock into which it may be converted. Most convertible securities trade at a conversion premium, though it usually lessens as the common stock increases in price.
conversion premium
The excess at which a convertible security sells above its conversion value. The conversion premium usually declines as a convertible security rises in market price. A bond trading at $1,400 and convertible into 50 shares of common stock with a current market price of $22 each sells at a conversion premium of $1,400 - (50 × $22), or $300.
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The bonds will mature in five years and three months, with a conversion premium of 25%-30% and a yield to maturity of 2.
Atos Announces $155m Convertible Bond Issue by Computergram International
This is not statistically different from the average conversion premium of 19.
Convertible bond financing: are some issuers mimickers? by Bhabra, Harjeet S.; Patel, Ajay / Financial Management
Because of the big premium, however, the common stock would need to increase to $33 from its late August price of $19 -- with no change in the convertible price -- before the conversion premium would be in the 20% range, in line with other convertibles.
Convertible bonds' hybrid vigor by Cohen, Jeff / Business North Carolina
 
 
 
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