Conversion Ratio
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Term
Main definition
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The ratio used to determine the number of shares of stock into which a convertible security may be converted.
In a preferred stock transaction, this most commonly refers to the ratio that determines, at any point in time, the number of shares of common stock into which shares of convertible preferred stock may be converted. The ratio can change due to adjustment mechanisms that may become applicable by virtue of the future operation of the anti-dilution provisions.
