CONVERSION RATIO Meaning and
Definition
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Conversion ratio is a financial term that refers to the measure of how many common shares can be obtained from each convertible security. In other words, it is the ratio at which a convertible security can be exchanged for underlying common shares. This ratio is a crucial aspect in determining the conversion value of convertible securities such as bonds, preferred stocks, or debentures.
The conversion ratio is derived by dividing the par or face value of the convertible security by the conversion price. The conversion price is the predetermined price at which the security holder can convert their holdings into common shares. By knowing the conversion ratio, investors can assess the true value of the convertible security and its potential for generating returns.
A higher conversion ratio indicates that each convertible security can yield a greater number of common shares, making it more desirable for investors. On the other hand, a lower conversion ratio implies that a smaller number of common shares will be obtained, which may reduce the attractiveness of the security.
The conversion ratio is a key factor that influences the investment decision related to convertible securities. It affects the pricing and trading dynamics of these securities in the financial markets, as well as the potential profitability for investors.
Common Misspellings for CONVERSION RATIO
- xonversion ratio
- vonversion ratio
- fonversion ratio
- donversion ratio
- cinversion ratio
- cknversion ratio
- clnversion ratio
- cpnversion ratio
- c0nversion ratio
- c9nversion ratio
- cobversion ratio
- comversion ratio
- cojversion ratio
- cohversion ratio
- concersion ratio
- conbersion ratio
- congersion ratio
- confersion ratio
- convwrsion ratio
- convsrsion ratio
Etymology of CONVERSION RATIO
The etymology of the word "conversion" can be traced back to the Latin word "conversio", which means "a turning around" or "a change". It is derived from the verb "convertere", which combines "con" (meaning "together") and "vertere" (meaning "to turn").
The word "ratio" comes from the Latin noun "ratiō", which translates to "reckoning" or "calculation". It is derived from the verb "reri", meaning "to think" or "to consider".
When combined, "conversion ratio" refers to the ratio or proportion in which one thing is converted or transformed into another, often used in various fields such as finance, marketing, or chemistry to describe the relationship between different units of measurement, values, or quantities.
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