We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.
GO TO SAT PREP GO TO ACT PREP

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Adjustable Rate Preferred Stock

Definition:

Okay, first see preferred stock for the gist.

Preferred stock is preferred because stockholders with these puppies are paid before common stockholders if a company goes belly-up. If your stock says "preferred stock—ARPS," then the rate paid out depends on a specific set standard or yardstick (usually T-bills). So if T-bills (or whatever the benchmark the company uses) suddenly pay out more, your stock will, too.

And that's how it's adjustable.