Question about Conversion Ratio (example included)

You get 0.1 common shares of MSTR for one share of the preferred stock (MSTK).

The MicroStrategy perpetual strike preferred stock are intended to work the following way:

• they have a face value of $100, which is what you initially have to pay for them, and which is what MicroStrategy say they will still pay in case they go bankcrupt - which is something that you may have to assign your own risk value to. Note that preferred stock owners get remaining assets before common stock holders, but after bond holders.
• you get a dividend, which is set at the offering, and assumed to be at around 8% (i.e. $8 per year)
• you have no voting rights
• you are allowed to convert the preferred stock into 0.1 common stocks. This is only a good deal for you if the common stock is worth at least $1000 (assuming you got the preferred stocks at $100), otherwise you would just buy the common stock for less.
• MicroStrategy is allowed to buy them back under certain conditions, but for at least $100

So the deal is: MicroStrategy gets money, and you get a dividend, and if the common stock (which loosely correlates with the bitcoin price) raises above $1000, you can (but don't have to) convert them, and profit from the raise in stock value. This behaviour is similar to a call option.

It is actually intended that the conversion doesn't make sense right now (with MSTR stock at around 1/3 of those $1000), as until you convert them, they are basically an open ended bond/loan at (around) 8% for MicroStrategy. Also, until the MSTR stock gets closer to the conversion value, their inherent value should be around $100 plus value of the dividend, so they will probably(!) trade at a more stable value than the common stocks.

Note that this is specific to the MicroStrategy situation, but other convertable preferred stocks will in general work similarly (although each can have their own rules).