When the issuing corporation retains the right to repurchase shares of preferred stock at a specified price, the preferred stock is said to be:

Question

Quizplus · Accepted Answer

When a corporation retains the right to repurchase its own shares of preferred stock at a specified price, the stock is considered callable. This means that the corporation can "call back" the stock and retire it if it chooses to do so. This feature is often included in preferred stock agreements to give the corporation more flexibility and control over its finances. Callable preferred stock typically pays a higher dividend rate to compensate investors for the added risk of having their shares possibly called back.

When the Issuing Corporation Retains the Right to Repurchase Shares