Callable Common Stock

  

Calling all common stockholders! A callable common stock is one in which the issuer (or a third party) has the right to repurchase the stock after a certain period of time and at a specific price.

Let's say Phil Collins owns 150 shares of Call Me Uncommon Inc. They are callable at 107% of the current market price, which at the moment is $200 a share. So, Call Me Uncommon could force Phil to sell his shares back if the price hits $214. As the shares start to approach this level, the probability of the stock being called increases. It is doubtful the price of these callable stocks will go up much beyond the $200 price since everyone knows Call Me Uncommon will probably call the shares in.

Since there is some amount of risk of the shares being called, the Financial Industry Regulatory Authority (FINRA) requires that it be explicitly disclosed if a common stock is callable.

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Finance: What is Forced Conversion?59 Views

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Finance allah shmoop what is forced conversion Okay this is

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forced conversion Yeah this is also forced conversion and so's

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this Yeah that is the issuer of this particular bond

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Like the company who borrowed money has the right as

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described in the indenture to force you to convert the

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bond either into and say twenty five shares of common

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stock or something else Which sort of implies that a

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stock price the over under price of breaking evens about

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forty bucks a share takes you get that thousand dollars

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bucks a share or the issuer or company who sold

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the bond in the first place can simply call the

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bond and force converted into cash for the small conversion

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premium of ah two point five percent or that's twenty

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five bucks in this thousand dollars par value bond So

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in this sense essentially the break even Numbers actually 41

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dollars a share not forty there because you get an

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extra little premium bump there if they force you to

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convert the bond or debt into equity Got it We'll

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force conversion in a bond sense is usually something cos

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do when they can either refinance the bond at cheaper

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have enough cash Teo just retire their debt They call

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