We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.
GO TO SAT PREP GO TO ACT PREP

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Convertible Stock

Definition:

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. 

Example

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.