How to Use the Convertible Bond Parity Calculator
A convertible bond (CB) is a bond that carries the right to convert into a fixed number of shares at a set conversion price. Parity (conversion value) measures what the bond would be worth if converted into stock right now, expressed as a percentage of face value — it's the first number convertible bond investors check before deciding whether to convert.
When parity rises above 100%, the stock price has climbed past the conversion price and converting can produce a profit. Below 100%, converting today would be a loss. Comparing the bond's market price to parity — the premium — tells you whether it's better to sell the bond outright or convert first and sell the shares.
Keep in mind that most convertible bonds only allow conversion during a specific window defined in the indenture, and some carry reset (repricing) clauses that can lower the conversion price over time. This calculator is a point-in-time estimate, so always confirm the latest terms before actually exercising the conversion right — especially when the stock is trading close to the conversion price, since parity can swing meaningfully day to day.
Frequently Asked Questions
Parity is the value of converting the bond into stock right now, expressed as a percentage of face value. 100% means the conversion value equals face value.
A negative premium means the bond's market price is below its conversion value, so converting now and selling the stock could be more profitable than selling the bond outright.
No. Each convertible bond has a specific conversion period defined in its offering terms, and the conversion right can only be exercised within that window.