Most preferred stock is convertible into common stock 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). This convertibility feature is a big deal: it's basically like you're 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 normal...
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