floating-rate preferred stock(redirected from Floating Rate Preferred Stocks)
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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.