why would investors buy convertible preferred stock 
convertible preferred stock offers the investor the benefits of both preferred stock and common stock investors get the stability liquidation priority and higher dividends of preferred stock but they also have the option to convert their shares into common stock later if they believe that the price will go up this conversion feature can generate a potentially higher return on investment than investors would get with traditional preferred stock while also offering a level of flexibility that is not possible with either preferred stock or bonds the bottom linecombining features of both preferred and common stock convertible preferred shares are a hybrid security with the benefit of a steady fixed dividend and the potential for capital appreciation via conversion investors in this type of security value their flexibility the conversion price or the number of common shares that one share of convertible preferred stock is good for is determined at the time of issuance and may be adjusted subsequently by the issuer 