Even Though the Dividend Rate on an Adjustable-Rate Preferred Stock

Even though the dividend rate on an Adjustable-Rate Preferred Stock (ARPS) is floating to keep in line with interest rates,the instrument still suffers from risk such as:

A) a thin market causing potential principal risk and liquidity concerns.
B) the risk of downgrades from the narrow range of issuers.
C) the impact of tax law changes, which may reduce the after-tax value of the instrument.
D) All of these.
E) None of these.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free