Forced conversion refers to the corporation calling a convertible bond when the market price of the stock is above the conversion price by more than a small percentage.

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Forced conversion occurs when a company calls a convertible bond, compelling bondholders to convert their bonds into stock, typically when the stock price is significantly higher than the conversion price, allowing the company to reduce debt and potentially lower interest expenses.

Forced Conversion Refers to the Corporation Calling a Convertible Bond