how are convertible bonds valued 
a convertible bond is a debt instrument that has an embedded option that allows investors to convert the bonds into shares of the company s common stock convertible bond valuations take a multitude of factors into account including the variance in underlying stock price the conversion ratio and interest rates that could affect the stocks that such bonds might eventually become at its most basic the convertible is priced as the sum of the straight bond and the value of the embedded option to convert 