An escalation clause will normally cause preferred shares to trade as debt.

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An escalation clause typically refers to a provision in a contract that allows for an increase in wages or prices under certain conditions, not a feature of preferred shares that would cause them to trade as debt. Preferred shares trade more like debt or equity based on their dividend rates, convertibility, and other features, not escalation clauses.

An Escalation Clause Will Normally Cause Preferred Shares to Trade