The price of some stocks, especially recent hot IPOs and high tech stocks can soar and drop suddenly.
In these fast markets, when many investors want to trade at the same time and prices change quickly, delays can develop across the board.
Executions and confirmation slow down while reports of prices lag behind actual prices.
In these markets, investors can suffer unexpected losses very quickly.
A convertible security is a security - usually a bond or a preferred stock - that can be converted into a different security - typically shares of the company's common stock.
In most cases, the holder of the convertible determines whether and when a conversion occurs.
In other cases, the company may retain the right to determine when the conversion occurs.