Compare a convertible bond's value as a bond vs converted to shares.

A bond with a 1,000 face value converting into 20 shares at a 60 share price has a conversion value of 1,200 — worth more converted than held. A share price of 45 gives a conversion value of 900, so the bond is worth more as debt.

How to use it

Enter the bond's face value (or its current market price if you're comparing a traded convertible), the conversion ratio (how many shares each bond converts into), and the share price.

What the result means

The primary result is the higher of bond value and conversion value — the minimum rational bondholder value today. The secondary rows show both sides and the gap. A positive conversion premium means the bond is trading above its conversion value (common while the option has time value); a negative one means the bond is trading at a discount to its convert-and-sell value.

What this doesn't model

Time value, credit risk, call features, and coupon cash flows. For a full convertible valuation you need a binomial tree or Monte Carlo approach. This tool gives you the floor — the higher of the two simple values — which is usually the useful first check.

A worked example

Try the defaults: bond face value of 1,000, conversion ratio of 20, current share price of 60. The tool returns 1,200.00. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Bond Face Value, Conversion Ratio, and Current Share Price. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

The rational holder value is the higher of the bond's face value and its conversion value (ratio × share price). This is a simplified view — it ignores coupon value, time to maturity, credit spread, call features, and option time value. For a traded convertible, market price typically sits above this floor. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Using this well

Treat the output as one point on a wider map. Run it three times — a pessimistic case, a central case, and a stretch case — and plan against the pessimistic one. That habit alone separates people who stick with an investment plan from those who bail at the first wobble.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.