Which of the following statements about floating rate preferred stock is true?
A)The dividend rate changes quarterly.
B)The price of the stock fluctuates with the market.
C)The dividend rate is tied to the inflation rate.
D)More than one of the options.

Question

Quizplus · Accepted Answer

Floating rate preferred stock has a dividend rate that changes periodically, usually quarterly, based on a predetermined formula or benchmark. The price of the stock may still fluctuate with the market due to supply and demand factors, but the dividend rate is tied to an external reference rate, such as the LIBOR or the federal funds rate, and adjusts accordingly.

Which of the Following Statements About Floating Rate Preferred Stock