Adjustable Rate Preferred Stock

Adjustable Rate Preferred Stock - A preferred stock with dividends that change, mainly quarterly, in accordance to changes that take place with Treasury Bill rates, or another benchmark, which is a standard the stock market uses for comparison. For example, Nasdaq could be used as a benchmark to what performance of a technology stock is compared to. A pre-set formula dictates the changes that take place with the preferred stock. Some changes that might affect it are floating rate debt, although adjustable rate preferred stocks have a tendency to have stable pricing. This is mainly because the amount of the dividend can be changed to offset nominal price changes.