common stock equivalent

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Common stock equivalent

A convertible security that is traded like an equity issue because the optioned common stock is trading above the conversion price.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Common Stock Equivalent

A convertible security that is traded as if it was a common stock. The common stock equivalent is traded like common stock because it can be exchanged for actual common stock on demand from the holder.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

common stock equivalent

A security viewed as basically the same as common stock, generally because the equivalent security may be exchanged for shares of common stock. Common stock equivalents include convertible bonds, convertible preferred stock, options, and warrants. Common stock equivalents are used in calculating earnings per share even though the calculation overstates the actual number of shares outstanding.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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However, at $13.5 million, the common stock equivalents have a $0 per-share price.
Thus, if a convertible security is initially classified as a common stock equivalent, it is always a common stock equivalent even though current economic conditions may render its conversion into common stock unlikely.
The simplification, brought about by eliminating common stock equivalents and the primary EPS calculation, also eliminates a source of arbitrariness.
The new Statement replaces PEPS with basic EPS, significantly simplifying the EPS calculation by not considering whether securities are common stock equivalents. This change makes EPS calculations easier.
For example, critics cite the requirement for determining whether a security is a common stock equivalent. While stock options and warrants always are regarded as common stock equivalents, convertibles are classified as common stock equivalents only if, at issuance, their effective yield is less than two-thirds of the average yield on Aa-rated corporate bonds with similar characteristics but without the conversion option.
Originally termed "residual securities," common stock equivalents are convertible securities that derive a major portion of their value from the fact that they can be exchanged for common stock.
A common stock equivalent is a security that, because of the terms under which it was issued, is in substance the same as common stock.
The preferred stock sold in the offering was structured as a non-voting common stock equivalent for regulatory considerations.
As part of the asset sale, Fletcher has received the balance of a USD30m warrant to purchase common stock equivalent junior preferred stock worth 7,058,824 shares of United's common stock at an exercise price of USD4.25 per common share.
The shares of common stock (or common stock equivalent) and the accompanying common warrants included in the units can only be purchased together in this offering but will be issued separately, according to the company.
Under the public offering, the company priced the offering at USDD0.40 per share of common stock (or common stock equivalent), with each share of common stock (or common stock equivalent) sold with one five-year warrant to purchase one share of common stock, at an exercise price of USD0.40 per share.
This offering was priced at USD0.70 per share of the company's common stock (or common stock equivalent), with each share of common stock (or common stock equivalent) sold with one warrant to purchase one share of the company's common stock.