Convertible Preferred Stock

Convertible Preferred Stock is one of several classes of preferred stock that can be issued by a company.  To add to the marketability of a preferred stock, convertible preferred stock provides the holder with the ability to exchange the preferred stock for shares of common stock.

The price of convertible preferred stock tends to move in step with the price of the company's common stock.  If a company demonstrates through earnings, or other means, that it will prosper in the future, and its common stock rises, this is to the benefit of the preferred stockholder.

The convertible preferred stock has the additional advantage of preference with respect to dividends, as do all holders of preferred stock.