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Convertible Preferred Stock |
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Convertible preferred stock Preferred stock that can be converted into common stock at the option of the holder. See also: participating convertible preferred stock. Convertible Preferred Stock A preferred stock that a stockholder may exchange, at any time after a waiting period, for common stock in the company issuing the bond. The number of shares one receives for each preferred share is determined when the convertible preferred stock is issued. A convertible preferred stock is a relatively low-risk investment because of the guaranteed dividends, but it affords the investor a great amount of leeway because he/she can exchange it for common shares, which have higher risk and higher returns. See also: Conversion ratio, Convertible bond. Convertible Preferred Stock What Does Convertible Preferred Stock Mean? Preferred stock that allows the holder to convert the preferred shares into a fixed number of common shares, usually any time after a predetermined date. Also known as convertible preferred shares. Investopedia explains Convertible Preferred Stock Most convertible preferred stock is exchanged at the request of the shareholder, but sometimes there is a provision that allows the company (or issuer) to force conversion. The value of convertible common stock ultimately is based on the performance (or lack of performance) of the common stock. Related Terms: Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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