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Conversion

• Is the action of transforming a security into another security. A convertible bond, when exercised, will convert into the stipulated number of common shares.

 
 Embedded terms in definition
 Bond
Common shares
Convertible bond
Convertible
Security
Shares
Will
 
 Referenced Terms
 American depositary receipt: Is an instrument which is issued in the United States but based on foreign securities. This security facilitates trading and investment because it is quoted in terms of the U.S. Dollar. This compares to the initial situation of the underlying shares quoted and traded in currencies other than the U. S. dollar.Abbreviated ADR or ADRS. Certificates issued by a U.S. depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are sponsored, the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. Unsponsored ADRs do not receive such assistance. ADRs carry the same currency, political and economic risks as the underlying foreign share; the prices of the two, adjusted for the SDR/ordinary ratio, are kept essentially identical by arbitrage. American depositary shares (ADSs) are a similar form of certification.Claims issued by U.S. banks representing ownership of shares of a foreign company's stock held on deposit by the U.S. bank in the foreign market and issued in dollars to U.S. investors.A negotiable certificate representing a given number of shares of stock in a foreign corporation; it is bought and sold in the American securities markets, just as stock is traded. ADRs are issued by a U.S. bank, consisting of a bundle of shares of a foreign corporation that are being held in custody overseas. ADRs can be sponsored, which means the corporation provides financial and other information to the bank, or unsponsored. While ADRs have the same currency and economic risks as the underlying foreign shares, they are much more convenient for U.S. shareholders to own since there are no problems in transferring securities from a foreign country or currency Conversion.

 Baumol model: A model that provides for cost-efficient transactional cash balances; assumes that the demand for cash can be predicted with certainty and determines the economic Conversion quantity (ECQ).

 Bond value: With respect to convertible bonds, the value the security would have if it were not convertible apart from the Conversion option.

 Common stock equivalent: Abbreviated CSE. All contingent securities that derive a major portion of their value from their Conversion privileges or common stock characteristics.A convertible security that is traded like an equity issue because the optioned common stock is trading high.

 Conversion parity price: Related: Market Conversion price

 
 Related Terms
 Cash conversion cycle
Conversion clause
Conversion factor
Conversion feature
Conversion or stock value
Conversion parity price
Conversion premium
Conversion price
Conversion ratio
Conversion value
Economic conversion quantity
Forced conversion
Market conversion price
Reverse conversion
Stated conversion price

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