Convertible Preferred Stock

Dictionary Says

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."

Investopedia Says

Investopedia explains '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.

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