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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Floor value
Sir what is mean by floor value at the time of conversion
The floor value is the lowest value that a convertible bond can fall to.
It is calculated assuming that the bondholders will take cash on redemption rather than converting to shares.
So it represents the present value of the future interest receipts and the cash redemption amount, assuming no conversion takes place. This value acts as a minimum guaranteed market value for the bond.
