Convertible exchangeable preferred stock

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Convertible exchangeable preferred stock

Convertible preferred stock that may be exchanged, at the issuer's option, into convertible bonds that have the same conversion features as the convertible preferred stock.

Convertible Exchangeable Preferred Stock

Preferred stock in a publicly-traded company that, at the discretion of the stockholder, may be exchanged for either common stock or convertible bonds. If the stockholder elects to trade for convertible bonds, he/she retains the ability to exchange the bond for common stock on the exact same terms.
References in periodicals archive ?
The adverse-selection hypothesis implies that conventional convertible preferred stocks should be called earlier than convertible exchangeable preferred stocks.
Convertible exchangeable preferred stocks make up the majority of the sample offerings in 1985-1989, while conventional convertible preferred stocks predominate in other years.
4% of the convertible exchangeable preferred stocks and 39% of the convertible preferred stocks.
Table 2, Panel B reports that the mean dividend yield on convertible exchangeable preferred stocks is 8.
The convertible exchangeable preferred stocks have a mean call protection of 1070 days (median 1095 days).
The adverse-selection hypothesis predicts that convertible preferred stocks are called sooner than convertible exchangeable preferred stocks, on average, [TABULAR DATA FOR TABLE 4 OMITTED] and that issuers of the latter exercise the exchange option frequently.
The fates of the issues are inconsistent with convertible exchangeable preferred stocks being less likely than conventional issues to be converted into common stock at an early date.
This paper analyzes an innovation that has survived for over 15 years, convertible exchangeable preferred stock.
Convertible exchangeable preferred stock is a variant of convertible preferred stock that first appeared in 1982.
The second explanation, designated the adverse-selection hypothesis, states that some firms avoid issuing convertible exchangeable preferred stock to signal that they expect their common stock prices to rise rapidly, permitting them to force conversion early.
Also under the adverse-selection hypothesis, the common stock-price reaction to a convertible exchangeable preferred stock offering should be more negative than the reaction to a convertible preferred stock offering.
Potential Explanations for Convertible Exchangeable Preferred Stock Issuance