common stock equivalent investment & finance definition
A convertible security that trades like its
underlying common stock because the stock is trading substantially above its
conversion price. Common stock equivalents also may be calculated for
convertible bonds in order to calculate a company’s fully diluted earnings.
See common stock equivalent in Wall Street Words
A security viewed as basically the same as common stock, generally because the equivalent security may be exchanged for shares of common stock. Common stock equivalents include convertible bonds, convertible preferred stock, options, and warrants. Common stock equivalents are used in calculating earnings per share even though the calculation overstates the actual number of shares outstanding.
Learn more about common stock equivalent