The value of preferred shares is affected by changes in interest rates.

Question

Quizplus · Accepted Answer

The value of preferred shares is closely tied to interest rates as they are fixed-income securities. When interest rates rise, the value of preferred shares tends to decrease as investors seek out higher-yielding investments. Conversely, when interest rates fall, the value of preferred shares tends to increase as they become more attractive compared to other fixed-income investments.

The Value of Preferred Shares Is Affected by Changes in Interest