What is CONVERTIBLE PREFERRED STOCK?

A class of PREFERRED STOCK that allows the investor to convert it into a specified number of shares of COMMON STOCK once a conversion price is reached. Convertible preferreds pay DIVIDENDS rather than COUPON interest, often on a cumulative basis, and are generally perpetual. In certain cases issues are floated with mandatory conversion features, requiring conversion into new common stock by a specific date if a minimum price target is reached.

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