The amount of time it takes for the positive yield advantage to recover the premium paid for the downside protection, regardless of the time value of money. The breakeven yield advantage can be calculated using this formula:

For example, a convertible’ premium points, price, and current yield advantage are $20, $33, and 2.5, respectively, then:

Breakeven yield advantage = [(20/33)/2.5] x 100 = 25.24 years

This implies that it will take a bit more than 25 years to recover the premium paid for downside protection, ignoring the time value of money.