52. Effective conversion price is defined as the redemption price divided by the conversion ratio. For example, if the bond is redeemable at 103.5 and the conversion ratio is 14.865 shares, the effective conversion price is $1035/14.865 shares = $69.627 per share, although the conversion price is $1000/14.865 shares = 67.272 per share. In the case of accreting securities, it is the accreted price divided by the conversion ratio.

53. We say “roughly” because some converts on high dividend yielding stocks have been issued with negative yield advantage. Investors correctly view them as equity with very valuable puts, and hence, as very defensive securities.