adjustment in conversion terms business definition

An alteration in the terms under which a convertible security may be exchanged. For example, if an issuer implements a two-for-one split (resulting in a doubling of the number of shares) in the common stock into which its convertible security may be exchanged, the issuer will nearly always be required to reduce the convertible's conversion price by half. Automatic price adjustments also may be scheduled throughout the life of a convertible security.