Auction-Rate Preferred Stock has less risk factors than Adjustable-Rate Preferred Stock (ARPS) because:

Question

Quizplus · Accepted Answer

All of these statements are true regarding Auction-Rate Preferred Stock, which means that it has less risk factors than Adjustable-Rate Preferred Stock. The shorter 49-day reset period makes it easier for investors to adjust to changes in interest rates, the market sets the dividend level reducing principle volatility, and better liquidity allows corporate investors to control their investments individually.

Auction-Rate Preferred Stock Has Less Risk Factors Than Adjustable-Rate Preferred