The higher the market conversion price relative to the current stock price, the greater the premium payback period.

Question

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The market conversion price is the price at which a convertible security, such as a convertible bond or preferred stock, can be converted into common stock. When this price is significantly higher than the current stock price, it implies that the security is being converted at a premium. As a result, it will take a longer period for the investor to recoup this premium through the appreciation of the stock, hence a greater premium payback period.

The Higher the Market Conversion Price Relative to the Current