The value of the “straight” fixed income element of the convertible alone, without consideration to the value of the convertible’s embedded equity option. More specifically, this value is equal to the sum of its interest and principal payments. In calculation, a discount rate is applied to the cash flows attainable over the bond’s life. This rate represents the required rate of return for an otherwise similar nonconvertible bond (in terms of risk, maturity, liquidity, and tax treatment).

A convertible bond is always worth the conversion value or the straight bond value, whichever is larger.

This value is also known as an investment value.