A preferred stock has a par value of $100 and is convertible into 4 shares of common stock. The preferred stock is valued at $87 a share and the common stock is selling at $20 a share. What is the conversion value?

Question

Quizplus · Accepted Answer

The conversion value is calculated by multiplying the number of shares the preferred stock can be converted into by the current price of the common stock: 4 shares * $20 = $80.

A Preferred Stock Has a Par Value of $100 and Is