What is the conversion right for preferred stocks?
What will be an ideal response?
Convertible preferred stock permits the preferred stockholders to convert their shares into common stock. The terms and exchange rate of the conversion are established when the shares are issued. The holders of convertible preferred stock usually exercise this option if the corporation's common stock significantly increases in value. Preferred stock that does not have a conversion feature is called nonconvertible preferred stock. Nonconvertible stock is more common than convertible stock.
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Indicate whether the statement is true or false.
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