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I was just going off an old mental note that said ARE-D has about had its run, price-wise, because it's about up against its forced-conversion price, so be looking around for a substitute. Thanks, AJ, for stating the situation with more precision than I did.

As to the premium to conversion price, that's typical for a convertible, when the common is below the conversion price, but not far below. When the common is way below the conversion price ("busted convertible") they trade like straight preferreds with no call risk. When the common is above the call price, they trade at very close to their conversion value. In between those two extremes, they trade with a modest premium to their conversion value, and with lower yields than a comparable straight preferred or busted convertible. The premium gradually declines as the common appreciates, giving the holder some, but not all, of the appreciation of the common. It's a sweet spot if you are a conservative investor who still wants to be in the game for potential equity-like returns in the long run -- if the common tanks, your holding does not have far to fall before it is supported by its value as a busted convertible/straight preferred, but if the common takes off, you get a high percentage of the gain that you would have gotten by buying the common. Since it is a safer security than the common, you can take a larger position than you would have in a more risky security. And the income is higher.

Being comfortable with taking a larger position is key for me.
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