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Finance Dictionary and Glossary of Investment Terms
Applies mainly to convertible securities. Relationship that determines how many shares of common stock will be received in exchange for each convertible bond or preferred stock when a conversion takes place. It is determined at the time of issue and is expressed either as a ratio or as a conversion price from which the ratio can be figured by dividing the par value of the convertible by the conversion price.
The number of shares of common stock that could be obtained by converting each share of a convertible security.