The difference between the conversion price and the current stock price, divided by the current stock price, is called the:

Question

Quizplus · Accepted Answer

The difference between the conversion price and the current stock price, divided by the current stock price, is called the conversion premium. Option B, straight bond value, refers to the value of a bond without any conversion options. Option C, conversion value, refers to the value that a convertible bond would have if it were converted to stock at the current market price. Option D, conversion price, is the price at which convertible bonds can be converted into stock. Option E, conversion ratio, is the ratio of the number of shares of common stock that a convertible bond can be converted into.

The Difference Between the Conversion Price and the Current Stock