Free Version

Review Topics
Practice Exams
If I could hold a pencil, I'd mark up those reading passages like it was going out of style. Do it for the buffalo, man. Do it for me.

Non-Religious Conversion of Preferred Stock

Non-Religious Conversion of Preferred Stock

Most preferred stock is convertible at some ratio (i.e., for each share of preferred you get 5 shares of common) or based on some event (i.e., an IPO wherein more than $50 million is raised) into common stock. And this convertibility feature is a big deal – it’s basically like you are getting the bond-like element of a vanilla normal preferred stock PLUS a call option embedded in it. 

Sounds like a great idea, right? It is. But this privilege is also priced into the security. That is, if a...

Looking for more? Why is this annoying box in the way? It's because you haven't paid for the course yet!

Next: Pricing Bonds—Ratings, Risk and Liquidity
Prev: Straight vs. Cumulative Preferred

*Securities is a registered trademark of the College Board, which was not involved in the production of, and does not endorse this product.