Look for the research link!<\/p>\n
Preferred Shares may be classified as interconvertible if each element of the pair may be converted into the other element on a specified date (or dates) in the future at the holder’s option – always (I think!) with some restriction to ensure that each element must meet a minimum size requirement before it is allowed to exist. Examples are FixedFloater\/RatchetRate preferreds and FixedReset\/FloatingReset preferreds.<\/p>\n
This future interconversion implies the prices of the two elements (assuming that both are trading) should be related in a logical way, with the difference in price narrowing as the next interconversion date draws nearer.<\/p>\n
This concept has been discussed many times on PrefBlog, with other versions of this concept published via Preferred Pairs<\/a> and Pairs Equivalency Calculator<\/a>. There is also a Part 2 of this essay<\/a>, published in May, 2012.<\/p>\n Look for the research link!<\/p>\n
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