The formula to calculate the Conversion Ratio (CR) is:
\[ CR = \frac{PV}{SP} \]
Where:
A conversion ratio is defined as the ratio of the par value of the convertible security to the price of the equity or share. This metric is useful in understanding how many shares of stock a bondholder can receive upon conversion of a convertible bond.
Let's assume the following values:
Using the formula to calculate the Conversion Ratio (CR):
\[ CR = \frac{PV}{SP} = \frac{1000}{50} = 20 \]
The Conversion Ratio (CR) is 20.