Conversion Rate

  

Categories: Forex, International, Econ

In foreign currency trading, the conversion rate represents how much of one currency you get for a unit of another. So if the U.S. dollar is trading at 1.3 against the Canadian dollar, the conversion rate is 1.3. You get 1.3 Canadian dollars for each U.S. dollar you convert.

There's a separate definition of "conversion rate" that has to do with online sales. It refers to the number of people who come to your website and are converted into paying customers.

So...say you're selling a monthly subscription to a home electrolysis kit. You have 1,000 people visit your site on a particular day. Ten of them end up buying the service. Your conversion rate equals 1%...ten out of 1,000.

So yeah...nothing to do with the success rate of Jehovah's Witnesses.

Related or Semi-related Video

Finance: What are Convertible Bonds?9 Views

00:00

Finance a la shmoop what are convertible bonds? okay there's a joke about the

00:08

Inquisition in here somewhere or maybe something about Cossacks and 17th

00:13

century Russia what do you think animated musical or maybe a King Henry [King Henry VIII appears]

00:17

thing but yeah all that's different kind of conversion way more pedantically a

00:23

company might be having a hard time selling or issuing its bonds to Wall [Man with company briefcase for head meets man with Wall Street briefcase for a head]

00:29

Street in order for them to close the deal with their stock trading today at

00:33

25 bucks a share they might say well these bonds are convertible into 20 [Man with company for a head discussing bonds]

00:38

shares of our stock that is they would have a single thousand dollar unit of

00:43

that bond and it would convert into 20 shares which would then value the shares

00:48

at 50 bucks either thousand divided by 20 there's 50 it's an advanced calculus

00:53

sorry if you didn't have it which would sort of be you know the over/under price

00:56

at which bondholders would start to seriously look at converting their nice

01:01

safe bonds into those risky pesky equities well why would a company offer

01:06

convertible bonds instead of you know just vanilla bonds well if they were [Man discussing convertible bonds]

01:12

stuck paying 6% interest on just bonds but really could only afford to pay 4%

01:18

well they might get the interest rate discount by throwing in that equity

01:23

kicker in the bonds having that convertibility feature yes they would

01:27

suffer dilution at 50 bucks a share but that price is double and change where

01:32

the stocks out here so the company is probably thinking that it wouldn't mind

01:36

some dilution from these bonds being converted up there in stock price right [Arrow points to stock value mark on graph]

01:42

and remember the bonds pay the 4% interest along the way until they are

01:47

converted the moment those bonds are converted into equity well then the debt

01:51

on the balance sheet of the company and its obligation to pay that 4% yearly [Company balance sheet and interest highlighted]

01:56

interest goes mercifully away they print 20 more shares for each bond converted

02:02

and yes those shares may pay a dividend but as far as the convertible bonds go

02:07

they are thereafter converted and saved and remember Jesus Saves but Moses

02:15

invests

Up Next

Finance: What is Convertible Debt?
43 Views

What is convertible debt? Convertible debt is a type of bond that’s issued by a corporation. Ownership of these bonds means that the holder has t...

Finance: What is Busted Convertible?
14 Views

What is a Busted Convertible? A busted convertible is a convertible bond that will never be converted to stock because the underlying stock price i...

Find other enlightening terms in Shmoop Finance Genius Bar(f)