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In Regards to Adjustable-Rate Preferred Stock, Which of the Below

Question 2

Multiple Choice

In regards to adjustable-rate preferred stock, which of the below statements are FALSE?


A) The dividend rate on an adjustable-rate preferred stock is fixed quarterly.
B) The predetermined spread on an adjustable-rate preferred stock is called the dividend reset spread.
C) The popularity of adjustable-rate preferred stock declined when instruments began to trade below their par value- because the dividend reset rate is determined at the time of issuance, not by market forces.
D) In the case of adjustable-rate preferred stock, the dividend rate is determined periodically by a remarketing agent who resets the dividend rate so that any preferred stock can be tendered at par and be resold (remarketed) at the original offering price.

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