Convertible securit Convertible Security -A bond or a preferred stock that is convertible into a specified number of shares of common stock at the option of the holder This provides the convertible holder a fixed return (interest or dividend) and the option to exchange a bond or preferred stock for common stock The option allows the company to sell convertible securities at a lower yield than it would have to pay on a straight bond or preferred stock issue 22-422-4 Convertible Security -- A bond or a preferred stock that is convertible into a specified number of shares of common stock at the option of the holder. Convertible Security This provides the convertible holder a fixed return (interest or dividend) and the option to exchange a bond or preferred stock for common stock. The option allows the company to sell convertible securities at a lower yield than it would have to pay on a straight bond or preferred stock issue