Bond or preferred stock that is convertible into common stock. A warrant (or a right) to purchase common stock at a specified price, usually at a discount from market price, is also common stock equivalents. If common stock equivalents are converted, the equity of existing shareholders may become diluted. Thus, their conversion or exercise is factored in when calculating fully diluted earnings per share. See: Convertible Bond; Convertible Debenture; Convertible Preferred Stock; Convertible Securities; Dilution; Right; Warrant