The market value of a convertible security is likely to be greater than its straight value or conversion value.

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The convertible security has two potential sources of value - its straight value (the value it would have if it were not convertible) and its conversion value (the value it would have if it were converted into stock). The market value of a convertible security usually reflects a premium over these two values, as investors are willing to pay for the option to convert the security into stock at a later date. This means that the market value of a convertible security is likely to be greater than its straight value or conversion value.

The Market Value of a Convertible Security Is Likely to Be