Definition Conversion Ratio. Description.
The Conversion Ratio is an investing term that reflects the
number of shares of common stock that a security holder will receive from
exercising the call option of a
convertible bond or a
convertible preferred
stock. It is the number of shares of common stock that could be obtained
by converting each share of a convertible security.
The ratio can be calculated by the following formula:
Conversion Ratio = (Par Value of Convertible Security)
/ (Conversion Price
of the Common Security)
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Compare with:
Convertible Preferred
Stock | Convertible
Bond | Conversion
Price
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