Conversion premium

Calculate conversion value from the number of shares obtainable and their current price. The currency premium is convertible price minus conversion value; a percentage premium commonly divides that excess by conversion value, but state the convention. The premium can reflect debt payments, downside characteristics and option time value, not a guaranteed profit. A bond may be unattractive to convert immediately yet still have value because conversion can occur later. Distinguish current conversion value from the forecast value at maturity used in a simplified valuation.