| preferred stock that can be exchanged for a fixed number of shares of the common stock of the issuing company at the holder's option. |
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 Commentary
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.
Related Links
Convertible Bonds: An Introduction
Introduction To Convertible Preferred Shares
Stock Basics Tutorial
See also: Common Stock, Convertible Bond, Convertibles, Mandatory Convertible, Participating Preferred Stock, Preferred Stock, Prior-Preferred Stock