conversion equivalent

conversion equivalent

The price at which common stock would have to sell in order to make a convertible security worth its market price in common stock value alone. The equivalent is calculated by dividing the conversion ratio into a convertible security's market price. A $1,000 face amount bond trading at $1,200 and convertible into 40 shares of stock has a conversion equivalent of $1,200/40 shares, or $30 per share.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.