Conversion premium: Difference between revisions
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The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares. | The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares. | ||
'''Example''' | |||
The current market price of ordinary shares is £2. | |||
The conversion price is £2.50. | |||
The conversion premium is given by: | |||
= (2.50 - 2.00) / 2.00 | |||
= 0.50 / 2.00 | |||
= 25%. | |||
== See also == | == See also == | ||
* [[Conversion price]] | * [[Conversion price]] | ||
* [[Convertible bonds]] | * [[Convertible bonds]] | ||
* [[Premium]] | |||
[[Category:The_business_context]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 17:54, 29 December 2022
The premium over an ordinary share's current market price at which the holder of the convertible security may convert it into ordinary shares.
Example
The current market price of ordinary shares is £2.
The conversion price is £2.50.
The conversion premium is given by:
= (2.50 - 2.00) / 2.00
= 0.50 / 2.00
= 25%.
