**Conversion parity**

Conversion parity is the process at which a debenture, preferred stock or convertible bonds price is equal to the value of the stock at which it will be exchanged into or converted.

How to tell if a convertible is trading at conversion parity:

1. Take the convertible's principal value and divide it by the conversion price.

2. Divide the convertible's market price by the total number of newly found shares.

It is selling at conversion parity if the quotient is equal to the price of the share.

if less, it is not trading at parity.