Convertible preferred stock Stanley Industries has a fixed conversion ratio of four common shares per one share of preferred stock. The preferred stock pays a divi- dend of £4.00 per share per year
The common stock currently sells for $30 per share and pays a dividend of $1.50 per share per year.
a. The current conversion value of each preferred share is _____.
b. If the preferred shares are selling at $116 each, should an investor convert the preferred shares to common shares?
c. What is one factor that might cause an investor not to convert from preferred to common stock?