Meso Numismatics Inc (MSSV)

[Mymoney0912]

Suppose XYZ Corp issues convertible preferred shares for $100 each and with a conversion ratio of 6.5 -- shareholders can convert one preferred share into 6.5 common shares. Dividing 6.5 into $100 gives a conversion price of $15.38. The common stock must reach this price to make conversion profitable. If the market price of XYZ common is $12, the conversion value of a preferred share is 6.5 times $12, or $78. The conversion premium percentage is the difference between the parity and conversion values divided by 100 -- or 22 percent in this example. If traders consider this a low conversion premium, the convertible preferred share prices will be very sensitive to the price of the common stock. In our example, once the common shares rise above $15.38, a convertible preferred shareholder can realize an immediate cash profit by instructing her broker to convert the preferred shares to common stock and then selling the stock. Your broker will handle all the details on your behalf