Convertible Preferred Stock


DEFINITION of 'Convertible Preferred Stock'

Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date.

Also known as "convertible preferred shares."


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BREAKING DOWN 'Convertible Preferred Stock'

Most convertible preferred stock is exchanged at the request of the shareholder, but sometimes there is a provision that allows the company (or issuer) to force conversion. The value of convertible common stock is ultimately based on the performance (or lack thereof) of the common stock.

  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Deferred Equity

    A type of security, such as preferred shares or convertible bonds, ...
  3. Convertible Bond

    A bond that can be converted into a predetermined amount of the ...
  4. Mandatory Convertible

    A type of convertible bond that has a required conversion or ...
  5. Common Stock

    A security that represents ownership in a corporation. Holders ...
  6. Convertibles

    Securities, usually bonds or preferred shares, that can be converted ...
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