Convertible Auction Rate Preferred Stock

Convertible Auction Rate Preferred Stock - a convertible auction rate preferred stock is a certain type of an auction related preferred stock that can be converted into shares of the underlying security an underlying security is a commodity or security, which is subject to delivery when an option is exercised on a convertible security. There are exceptions to the rule. including, index options (options to buy or sell shares of an index). And, futures which are settled in cash because they cant be delivered. The convertible auction rate preferred stock has its dividends rates reset by Dutch auction and usually has a ceiling on its interest rate