Conversion Parity Price Calculator

Formula

The formula to calculate the Conversion Parity Price is:

\[ \text{CPP} = \frac{\text{VCS}}{\text{CR}} \]

Where:

$\text{CPP}$ is the conversion parity price ($)
$\text{VCS}$ is the value of the convertible security ($)
$\text{CR}$ is the conversion ratio

What is a Conversion Parity Price?

A conversion parity price, also known more simply as just parity, is the break-even price on convertible securities. It’s also considered the effective price paid by an investor on convertible securities like bonds or options.

Example Calculation

Let's assume the following values:

Value of Convertible Security (VCS) = $1000
Conversion Ratio (CR) = 50

Using the formula to calculate the Conversion Parity Price (CPP):

\[ \text{CPP} = \frac{1000}{50} = 20 \text{ dollars} \]

The Conversion Parity Price is $20.