Conversion Ratio

Glossary

Banking

Conversion Ratio

The conversion ratio in a convertible bond dictates how many shares the holder of a convertible security receives by submitting the security to the issuer for conversion. It is calculated by dividing the par value of each bond by the conversion price. If an investor holds a GBP1,000 convertible and the conversion price is GBP20, the conversion ratio is 50.

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