Question

Convertible Preference share is one which carries _____________________.

• A. A right to receive arrears of dividend
• B. A rights to participate in the surplus profits and surplus assets
• C. A right to participate in the surplus profits or surplus assets or both
• D. A right of conversion into equity share

Answer 1

The correct option is D A right of conversion into equity share

Convertible preferred shares can be sold on the secondary market and the market price and behavior is determined by the coversion premium wh shown in the example above, the value of the converted preferred share is equal to the market price of common shares multiplied by the conversion ratio.