Sea Star Company has preferred stock with a par value of $15 that is convertible into common stock at the ratio of 1 to 1. The common stock has a par value of $8. The following table presents the components of stockholders' equity for Sea Star Company:
A. How many shares of common stock were sold during the year and at what price?
B. How many shares of preferred stock were converted this year?
C. Why would a company offer a conversion privilege?
D. List two reasons a shareholder might exercise the conversion privilege.

Question

Sea Star Company has preferred stock with a par value of $15 that is convertible into common stock at the ratio of 1 to 1. The common stock has a par value of $8. The following table presents the components of stockholders' equity for Sea Star Company:
  A. How many shares of common stock were sold during the year and at what price?
B. How many shares of preferred stock were converted this year?
C. Why would a company offer a conversion privilege?
D. List two reasons a shareholder might exercise the conversion privilege.

Quizplus · Accepted Answer

The Answer of Sea Star Company has preferred stock with a par value of $15 that is convertible into common stock at the ratio of 1 to 1. The common stock has a par value of $8. The following table presents the components of stockholders' equity for Sea Star Company:
  A. How many shares of common stock were sold during the year and at what price?
B. How many shares of preferred stock were converted this year?
C. Why would a company offer a conversion privilege?
D. List two reasons a shareholder might exercise the conversion privilege.

Sea Star Company Has Preferred Stock with a Par Value