The term preferred equity redemption stock refers to a security that features a mandatory conversion at maturity. Preferred equity redemption stock (PERC) can also be redeemed early by the issuing entity, but at a premium.
Also known as preferred equity redemption cumulative stock (PERCS), preferred equity redemption stock is considered an equity derivative that involves a mandatory conversion to preferred stock. The holder of the stock is not only entitled to the yield on the security, but also capital appreciation (subject to a cap).
On the redemption date, which is typically three to five years after the issue date, the holder of each share of PERC receives:
If the current price of common stock is lower than the price cap, the holder receives one share of common stock for each share of preferred stock held.
If the current price of common stock is higher than the price cap, the holder receives one share of common stock equal in value to the price cap for each share of preferred stock held. For example, if the price cap is $20.00 and the current price of common stock is $25.00, the preferred shareholder would receive $20.00 / $25.00, or 0.8 shares of common stock for each share of preferred stock held.
auction rate preferred stock, convertible exchangeable preferred stock, participating convertible preferred stock, convertible adjustable preferred stock
Explore Investing Further
Trading has never been easier, thanks to the rise of online platforms that enable you to buy and sell various assets at the click of a button. But with so many options available, it can be challenging to decide which platform is right for you.
Looking for a way to avoid swap fees while trading forex?
Below listed are the small reviews of the top 10 ETF brokers available across the United States.
Our top beginner's pick for copy trading is eToro. Read on for more details, plus seven good alternatives.
Swing trading stocks can be a great way for investors to take advantage of short-term stock market movements and gain significant returns. If you're interested in swing trading, the key to success lies in selecting the right stocks to buy and sell quickly for a profit.
The table below lists the best stock picks under $2, listed on public exchanges.
The table below lists the best stock picks under $1, listed both on public and OTC exchanges.
This section will highlight the best EV-trading penny stocks available in the United States.
The demand for sustainable energy has grown rapidly in recent years. This has resulted in increased scrutiny of the automotive market. As a result, the electric vehicle (EV) industry has made significant advancements.
Intelligent Bio Solutions Inc. is a life sciences company, founded in 2016 with headquarters in New York and is engaged in performing diagnostic tests, real-time monitoring, and non-invasive surgery for its patients. The firm has developed a CoV-2 Biosensor, which can be used in RNA virus detection.
Hour Loop was founded in 2013 with headquarters in Redmond, Washington. It’s an online retailer involved in e-commerce in the United States that hit the public markets on Jan 7th of 2022. The company sells home/garden decor, electronic products, kitchenware, and apparel through walmart.com, amazon.com, and hourloop.com.