What is Convertible Preferred Stock?

Convertible preferred stocks give holders the option to convert preferred stocks into common stock at a specific ratio. If the company's performance is booming and the share price of common stock increases, holders of convertible preferred stock can also share the company's success by converting preferred stock into higher value common stock. ^[1]

Convertible preferred stock

Convertible preferred stocks give holders the option to convert preferred stocks into common stock at a specific ratio. If the company's performance is booming and the share price of common stock increases, holders of convertible preferred stock can also share the company's success by converting preferred stock into higher value common stock. ^[1]

Convertible preferred stock refers to holders of certain types of shares that can be converted into other types of shares

So-called

The issuance of convertible preferred stocks has certain significance for both joint stock companies and investors.

1. When a stock company encounters difficulties in issuing shares, it can give priority stock subscribers a conversion request to attract more people to buy. At the same time, the dividend yield of convertible preferred stocks is often slightly lower than other types of preferred stocks, which also helps to reduce the burden on companies.

2. Investors invest in convertible preferred stocks, and actually have an opportunity to choose and change the type of assets. For example, after the investor subscribes for this type of stock, when the company has less profit, he can not exercise the conversion request right and continue to hold preferred stock to ensure a fixed dividend; when the company's profit is high, he can exercise the conversion request Convert into ordinary stocks to share generous profits.