Conversion Parity Price Calculator

✖Value of Convertible Security represents the combined worth of its fixed-income component and the option to convert it into equity at a predetermined ratio.ⓘ Value of Convertible Security [V_cs]			+10% -10%
✖Conversion Ratio specifies how many shares of common stock an investor receives for each convertible security held.ⓘ Conversion Ratio [CR]			+10% -10%

✖Conversion Parity Price equalizes prices between assets or instruments via arbitrage or market forces, eradicating price differentials.ⓘ Conversion Parity Price [CPP]

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Formula

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Conversion Parity Price

Formula

`"CPP" = "V"_{"cs"}/"CR"`

Example

`"48.78049"="1000"/"20.5"`

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Conversion Parity Price Solution

STEP 0: Pre-Calculation Summary

Formula Used

Conversion Parity Price = Value of Convertible Security/Conversion Ratio
CPP = V_cs/CR
This formula uses 3 Variables

Variables Used

Conversion Parity Price - Conversion Parity Price equalizes prices between assets or instruments via arbitrage or market forces, eradicating price differentials.
Value of Convertible Security - Value of Convertible Security represents the combined worth of its fixed-income component and the option to convert it into equity at a predetermined ratio.
Conversion Ratio - Conversion Ratio specifies how many shares of common stock an investor receives for each convertible security held.

STEP 1: Convert Input(s) to Base Unit

Value of Convertible Security: 1000 --> No Conversion Required
Conversion Ratio: 20.5 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

CPP = V_cs/CR --> 1000/20.5

Evaluating ... ...

CPP = 48.780487804878

STEP 3: Convert Result to Output's Unit

48.780487804878 --> No Conversion Required

FINAL ANSWER

48.780487804878 ≈ 48.78049 <-- Conversion Parity Price

(Calculation completed in 00.004 seconds)

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Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Nayana Phulphagar

Institute of Chartered and Financial Analysts of India National college (ICFAI National College), HUBLI

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< 18 Strategic Financial Management Calculators

Money Market Discount Rate

Go Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument

Effective Convexity

Go Effective Convexity = (Price of Bond When Yield is Decreased+Price of Bond When Yield is Increased-(2*Initial Price of Bond))/((Change in Curve)^2*Initial Price of Bond)

Add on Rate

Go Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest))

Change in Price of Full Bond

Go Percentage Change in Price of Bond = (-Annual Modified Duration*Change in Yield)+(1/2*Annual Convexity*(Change in Yield)^2)

Value of Right using New Shares

Go Value of Right = Number of New Shares*(Market Price-Issue Price of New Share)/Total Number of All Shares

Single Month Mortality

Go Single Month Morality = Prepayment for a Month/(Beginning Mortgage Balance for Month-Scheduled Principal Repayment for Month)

Value of Right

Go Value of Right per Share = (Stock Price-Right Subscription Price)/Number of Rights to Buy a Share

Cost of Equity

Go Cost of Equity = ((Dividend in Next Period/Current Share Price)+(Dividend Growth Rate*0.01))*100

Unlevered Beta

Go Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))

Levered Beta

Go Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity)))

Price Value of Basis Point

Go Price Value of Basis Point = (Price of Bond When Yield is Decreased-Price of Bond When Yield is Increased)/2

Price of Bond

Go Price of Bond = Face Value*(1+Implied Discount Rate)^Holding Period

Approximate Macaulay Duration

Go Approximate Macaulay Duration = Approximate Modified Duration*(1+Rate of Interest)

Conversion Parity Price

Go Conversion Parity Price = Value of Convertible Security/Conversion Ratio

Share Exchange Ratio

Go Exchange Ratio = Offer Price for Target's Share/Acquirer's Share Price

Earnings Yield

Go Earnings Yield = (Earnings per Share/Market Price per Share)*100

Dividend Rate

Go Dividend Rate = (Dividend per Share/Current Share Price)*100

Earnings Yield using PE Ratio

Go Earnings Yield = (1/Price-Earnings (PE) Ratio)*100

Conversion Parity Price Formula

Conversion Parity Price = Value of Convertible Security/Conversion Ratio
CPP = V_cs/CR

What is Conversion Parity Price ?

Conversion Parity Price (CPP) is a crucial concept in finance and economics, especially in the context of convertible securities. It refers to the price at which the convertible security (such as a convertible bond or preferred stock) is equal in value to the underlying common stock into which it can be converted. In simpler terms, it's the point at which it becomes financially neutral to convert the security into shares of stock, as opposed to holding onto it as a fixed-income instrument. The calculation of Conversion Parity Price involves considering various factors such as the market price of the common stock, the conversion ratio (the number of shares the convertible security can be exchanged for), and any dividends or interest payments associated with the security.

How to Calculate Conversion Parity Price?

Conversion Parity Price calculator uses Conversion Parity Price = Value of Convertible Security/Conversion Ratio to calculate the Conversion Parity Price, The Conversion Parity Price equalizes prices between assets or instruments via arbitrage or market forces, eradicating price differentials. Conversion Parity Price is denoted by CPP symbol.

How to calculate Conversion Parity Price using this online calculator? To use this online calculator for Conversion Parity Price, enter Value of Convertible Security (V_cs) & Conversion Ratio (CR) and hit the calculate button. Here is how the Conversion Parity Price calculation can be explained with given input values -> 48.78049 = 1000/20.5.

FAQ

What is Conversion Parity Price?

The Conversion Parity Price equalizes prices between assets or instruments via arbitrage or market forces, eradicating price differentials and is represented as CPP = V_cs/CR or Conversion Parity Price = Value of Convertible Security/Conversion Ratio. Value of Convertible Security represents the combined worth of its fixed-income component and the option to convert it into equity at a predetermined ratio & Conversion Ratio specifies how many shares of common stock an investor receives for each convertible security held.

How to calculate Conversion Parity Price?

The Conversion Parity Price equalizes prices between assets or instruments via arbitrage or market forces, eradicating price differentials is calculated using Conversion Parity Price = Value of Convertible Security/Conversion Ratio. To calculate Conversion Parity Price, you need Value of Convertible Security (V_cs) & Conversion Ratio (CR). With our tool, you need to enter the respective value for Value of Convertible Security & Conversion Ratio and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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