© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Convertible Stock


A type of preferred stock that can be converted into shares of common stock. What's the point of converting? If common stock takes off in value, making the switch could mean that you end up with a more valuable investment. 


Let's say you have $25,000 in a preferred stock. It converts into 1,000 shares of common. So if the common is selling above about 25 bucks, you'd want to convert. Hal E. Lujah.