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Floating-Rate Preferred Stock
(redirected from Floating Rate Preferred Stocks)

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Floating-Rate Preferred Stock
A preferred stock paying a dividend that varies from time to time. Usually, the dividend rate is the same as the interest rate on a Treasury security. They may also be backed by mortgages or mortgage-backed securities. Floating-rate preferred stocks tend to have stable prices because a drop in the common share's price is offset by a rise in bonds, and vice versa.

floating-rate preferred stock
A special and unusual type of preferred stock with a dividend that is reset at specified intervals according to a predetermined formula. Floating-rate preferred stock contrasts with most preferred stock issues that pay a fixed quarterly dividend. Floating-rate preferred stock issues do not generally fluctuate much in price because the dividend is automatically adjusted to keep the shares selling near to par. Also called adjustable-rate preferred stock, variable-rate preferred stock.


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The fund's Board of Trustees has approved the redemption, which is part of a restructuring plan that seeks to reduce common share net asset value volatility and potentially mitigate the risk of continued erosion of common share value due to the continuing and broad disruptions in the financial sector, which have impacted the fund's portfolio primarily consisting of floating rate preferred stocks of financial institutions.
 
 
 
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