Series 7 Exam Question 263: Answer and Explanation

Question: 263

Adjustable-rate preferred stock has a dividend that adjusts according to

• A. prevailing interest rates
• B. the amount of dividend given to common stockholders
• C. the coupon rate on the issuer's bonds
• D. the rate on CMOs

Correct Answer: A

Explanation:

A. Adjustable (floating rate) preferred stock receives a dividend that adjusts according to prevailing interest rates.