Investment Value of a Convertible Security

Estimated price at which a Convertible security (CV) would be valued by the marketplace if it had no stock conversion feature. The investment value for CVs of major companies is determined by investment advisory services and, theoretically, should never fall lower than the price of the related stock. It is arrived at by estimating the price at which a nonconvertible ("straight") bond or preferred share of the same issuing company would sell. The investment value reflects the interest rate; therefore, the market price of the security will go up when rates are down and vice versa. See also Premium Over Bond Value.