Preferred stocks or bonds convertible into common stock, or warrants to purchase common stock at a specified price or discount from market price. Common stock equivalents represent potential dilution of existing common shareholder equity.
Conversion parity is a concept in finance that refers to the equivalence between the value of a convertible security, such as a convertible bond, and the value of the common stock into which it can be converted.
The dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock; announced when the convertible security is initially issued.
A conversion right is a provision under the terms of a debenture trust deed that provides the investor with an option to convert their debt into equity.
Convertible securities can be crucial financial instruments for both investors and companies, offering the potential for conversion into common stock under specific conditions.
Diluted Earnings Per Share (EPS) is a metric that evaluates a company's earnings performance for each outstanding share, considering the worst-case scenario of dilution from convertible securities, options, and warrants.
Dilution refers to the reduction in earnings per share (EPS) and book value per share that occurs when convertible securities, such as convertible bonds and preferred shares, or warrants and stock options, are converted into common stock.
The process of making use of a right available in a contract; commonly used in context with options and convertible securities.
The if-converted method is a technique used in the USA for determining the dilution of convertible securities that are not common stock equivalents in the calculation of fully diluted earnings per share. The assumption is made that the securities are converted at the beginning of the year or the issue date if later.
