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Convertible Price

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Convertible price
The contractually specified price per share at which a convertible security can be converted into shares of common stock.

Conversion Price
In a convertible security, the price at which the owner is allowed to buy an equal number of common shares in exchange for trading in the convertible security. This price is set at the sale of the convertible security. For example, a company may buy an issue of convertible bonds (a low-risk investment) from another company with the agreement that if the company's stock increases greatly in value, the first company may trade its bonds for the right to a certain number of the company's stocks at a set, low price. This price is the conversion price.


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For example; the purchase price of each of the Pentax bonds with share subscription warrants = (the issue price of each bond (1,005,000 Yen) / the convertible price (540 Yen))* the purchase price of common stock (in the event that the result is not a whole number, the purchase price will be rounded to the nearest Yen).
The fundamentals of the underlying company drive the convertible price up along with the stock.
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.
 
 
 
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