Legal Definitions - convertible stock

Convertible stock is a type of investment that can be converted into another type of investment, usually common stock, at a later time. It is a type of convertible security, which is a type of financial instrument that can be converted into another type of financial instrument.

For example, let's say you invest in a company's convertible stock. This means that at a later time, you have the option to convert your investment into common stock. This can be beneficial if the company's common stock is performing well and you want to take advantage of that growth.

Another example of a convertible security is a bond that can be converted into common stock. This means that if the company's stock is performing well, you can convert your bond into stock and potentially make more money.

Overall, convertible stock and other convertible securities offer investors flexibility and the potential for higher returns.