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Finance Glossary

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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.