Conversion Option

Conversion Option - a conversion option is a feature on certain preferred stocks and some bonds... This feature would allow the shareholder to covert their shares into common stock. Preferred stock, also known as Capital stock, provides a specific dividend that is paid before any dividends are paid to common stock holders the conversion option allows the shareholder to convert their shares from Preferred (or capital stock) into Common stock. Common Stock represents equity ownership, gives voting rights to share holders and allows them to share in the company's success, through dividend pay outs. Preferred stock takes precedence over common stock in the case of liquidation