Series 7 - General Securities Representative Exam
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If XYZ preferred stock ($100 Par) is convertible to common stock for $20, what is the conversion ratio?
4
A
5
B
10
C
unknown
D
Explanations
The conversion ratio equals the par value of the preferred stock, divided by the conversion price. It tells you how many shares of common stock an investor receives for every share of convertible preferred stock that is converted