Convertible bonds: Those bonds which can be converted into proportionate number of common stock are called convertible bonds. These bonds get converted into equity. The provision under convertible bonds gives the issuers of bonds authority to convert bonds in the form of equity shares.
Conversion provision: The provision in which in which bondholder is allowed to convert bonds into the equity shares is called conversion provision. The bonds are converted into equity shares on the basis of conversion ratio. The conversion ratio is the number of shares that will be received after the conversion of convertible bonds.
Conversion ratio: The conversion ratio is the number of shares that will be received after the conversion of convertible bonds. It is calculated diving face
To Determine: Conversion ratio to convert the bonds into the equity at the end of the year.
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Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
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