Adjustable-rate preferred stock (ARPS) - Financial definition
Financial acronyms
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Country
: United States of America
Concise definition of the term adjustable-rate preferred stock
Adjustable-rate preferred stock is a type of preferred stock that pays a dividend rate which is adjusted at regular intervals, rather than fixed.
Comprehensive definition of the term adjustable-rate preferred stock
The reset of the dividend rate is based on a reference rate, usually a T-bill or T-note rate plus a margin.
Due to the periodical dividend rate reset, prices of ADPS are less volatile than those of fixed rate preferred stocks.