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Convertible Adjustable Preferred Stock - CAPS
What does it mean?
A preferred, floating rate issue, whose interest rate is tied to Treasury security rates. They can be exchanged for common stock or cash after the next period's dividend rates are announced. The shares received upon conversion are equal in market value to the par value of the preferred.
In Other Words...
The convertible feature is designed to protect the preferred investor's principal and provide greater liquidity in case the issuer's credit rating declines.
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Related Terms
Busted Convertible Bond | Common Stock | Common Stock | Contingent Convertible | Conversion Price | Convertible Bond Convertibles | Convertible Preferred Stock | Mandatory Convertible | Preferred Stock
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