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The conversion price is calculated by dividing the par value of the preferred stock by the conversion ratio. For example, if the par value of the preferred stock is $50 and the conversion ratio is 5, the conversion price would be $10.
Convene and hold a Board Meeting for passing the resolution for conversion of compulsorily convertible preference shares into equity shares of the company. In case of listed company, immediately within 15 minutes of the conclusion of the Board meeting, intimate the STOCK EXCHANGES with regard to the Board's decision.
The ratio is set by the company when the convertible preferred stock is issued. Conversion price: The price at which a convertible preferred share can be converted into common shares. Conversion price can be calculated by dividing the convertible preferred stock's par value by the stipulated conversion ratio.
Convertible preferred stocks are preferred shares that include an option for the holder to convert them into a fixed number of common shares after a predetermined date.
Convertible preferred shares can be converted into common stock at a fixed conversion ratio. Once the market price of the company's common stock rises above the conversion price, it may be worthwhile for the preferred shareholders to convert and realize an immediate profit.
They calculate the cost of preferred stock by dividing the annual preferred dividend by the market price per share. Once they have determined that rate, they can compare it to other financing options.