Convertible Bond Conversion Price Calculator

Find a convertible bond’s conversion price, conversion value, and conversion premium from its par value, conversion ratio, and the stock price.

Result

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How to use this calculator

Enter the bond’s par value and its conversion ratio (shares per bond).
Enter the current stock price.
Optionally enter the bond’s market price for the bond-premium figure.
Read the conversion price, conversion value, and premium.

About this calculator

A convertible bond is a hybrid security: it pays interest like a normal bond but can be converted into a fixed number of the issuer’s shares. Two numbers define the equity side. The conversion ratio is how many shares you receive per bond, and the conversion price — par value divided by the ratio — is the effective price per share at which you would be swapping your bond for stock. This calculator derives the conversion price, the current conversion value (the ratio times the live stock price, i.e. what the shares would be worth if you converted now), and the conversion premium, which is how far the stock must rise to reach the conversion price. When the stock trades below the conversion price the bond behaves like debt (a "bond floor"); when it rises above, the convertible tracks the equity. Understanding these levels shows whether a convertible is trading on its bond value or its stock upside.

How it works — the formula

Conversion price = Par ÷ Conversion ratio
Conversion value = Conversion ratio × Stock price
Conversion premium = (Conversion price − Stock) ÷ Stock

Par over ratio sets the effective conversion share price; multiplying the ratio by the live stock gives current parity, and the premium is the gap to the conversion price.

Source: Investopedia — Convertible Bond

Worked examples

Example 1

Par $1,000, ratio 20, stock $40

Inputs:: par=1000, ratio=20, stock=40, bondPrice=1000
Output:: conv price $50, value $800, premium 25%

Example 2

Par $1,000, ratio 25, stock $50

Inputs:: par=1000, ratio=25, stock=50, bondPrice=1250
Output:: conv price $40 — in the money

Example 3

Par $1,000, ratio 10, stock $80

Inputs:: par=1000, ratio=10, stock=80, bondPrice=900
Output:: conv price $100, premium 25%

Limitations

Ignores accrued interest, credit risk, and call features.
Conversion premium is to the conversion price, not a market-adjusted figure.
Does not value the embedded option (use a convertible pricing model for that).

Structural metrics; not a full valuation or investment advice.

Frequently asked

What is the conversion price of a convertible bond?+

It is the par value divided by the conversion ratio — the effective per-share price at which the bond converts to stock. A $1,000 bond with a conversion ratio of 20 has a conversion price of $50.

What is the conversion ratio?+

The conversion ratio is the number of shares you receive when you convert one bond. It is fixed at issuance and, with the par value, determines the conversion price. A ratio of 20 means each bond becomes 20 shares.

What is the conversion premium?+

It is how much higher the conversion price is than the current stock price, in percentage terms — essentially how far the stock must rise before converting is worthwhile. A 25% premium means the stock is 25% below the conversion price.

What is conversion value?+

Conversion value (or parity) is the worth of the shares you would receive if you converted right now: the conversion ratio times the current stock price. Comparing it to the bond’s market price shows whether the bond trades above or below parity.

When does a convertible behave like a bond versus a stock?+

When the stock is well below the conversion price, the convertible trades on its bond value (the "bond floor") and is relatively insensitive to the stock. As the stock approaches and exceeds the conversion price, the convertible increasingly tracks the equity.

Why do companies issue convertible bonds?+

They can pay a lower coupon than straight debt because investors value the equity upside, and conversion (if it happens) eliminates the debt. For investors, convertibles offer downside protection from the bond floor with participation in stock gains.