Open AccessAdjustable Rate Preferred Stock
Author(s) -
Clifford F. Thies
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v4i1.6449
Subject(s) - issuer , dividend , volatility (finance) , economics , monetary economics , financial economics , stock market , stock (firearms) , business , econometrics , finance , mechanical engineering , paleontology , horse , engineering , biology
The introduction and continuing innovation of adjustable rate preferred stock is discussed in light of institutional, regulatory and tax considerations. The observe volatility in the market prices of these securities is explained by the caps on their dividend re-set formulas and by the changing credit-worthiness of their issuers. An econometric model is developed which explains 76 percent of the variation in the market prices of seasoned issues and which is reasonably stable across time and across issuers.