The difference between the conversion price of a convertible bond and the current stock price, divided by the current stock price, is called the:

A) Conversion premium.
B) Straight bond value.
C) Conversion value.
D) Conversion price.
E) Conversion ratio.

Conversion Premium

The extra amount a investor pays over the convertible security's current value to convert it into shares of stock.

Conversion Price

The conversion price is the predetermined price at which a convertible bond or preferred stock can be converted into common shares of the issuing company.

Conversion Ratio

The number of shares an investor receives upon converting a convertible security, like convertible bonds or preferred stock, into common stock.