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Non-Religious Conversion of Preferred Stock

Dashboard > Investment Vehicle Characteristics, Part II > 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...

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