Konverteringspris

Konverteringspris, or conversion price, is the price at which a holder can convert a convertible security into common shares. It is a key term in instruments such as convertible bonds, convertible preferred stock, and certain warrants, and it helps determine the economic value of the conversion.

The conversion price is usually fixed at issuance and may be expressed as the par value of the security divided by the conversion ratio, or as an issue price divided by the conversion ratio. For example, a convertible bond with a par value of 1,000 and a conversion ratio of 25 shares per bond has a konverteringspris of 1,000 / 25 = 40 per share. The conversion price can also be subject to adjustments in response to corporate actions or other terms in the contract.

The conversion value of the instrument depends on the current market price of the underlying shares. If the stock trades at a price above the konverteringspris, converting the security into shares is typically advantageous for the holder, since the value of the received shares exceeds the conversion price. If the stock trades below the konverteringspris, the holder may choose not to convert, at least until market conditions improve or other terms of the instrument become favorable.

Adjustments to the konverteringspris can occur due to events such as stock splits, dividends, or other dilutive actions, to preserve the relative value of the conversion terms. In practice, the konverteringspris affects investor decisions, potential dilution for existing shareholders, and the issuer’s financing dynamics.

Related concepts include conversion ratio, conversion value, and dilution adjustments.