How Falling Conversion Prices Increase Share Counts
Summary
Hollow Point Trading shares an explainer on how convertible securities can produce different share counts under different conversion formulas. Using a hypothetical $1,000 principal amount, it compares 50 shares at a fixed $20 conversion price with a contract where a falling conversion price may result in more shares, highlighting potential dilution.
https://youtu.be/GjXvIbdKc_s
A falling conversion price can create more shares #ConvertibleBonds...
A convertible security can create different share counts depending on its conversion formula. Consider a hypothetical one thousand dollar principal amount. Ignore accrued interest, fees and fractional share rules. At a fixed twenty dollar conversion price, that principal converts into fifty shares. Now consider a different contract whose convers...
