Floating rate preferred stock would be ideal to have when the stock price fluctuates and when there are tax benefits to owning preferred stock.

Question

Quizplus · Accepted Answer

Floating rate preferred stock pays dividends that are tied to a benchmark interest rate, which makes it less sensitive to changes in interest rates compared to fixed-rate preferred stock. This can make it a good choice when interest rates are expected to rise. Additionally, preferred stock generally comes with tax advantages such as lower tax rates on dividends, making it a good choice for investors seeking tax benefits.

Floating Rate Preferred Stock Would Be Ideal to Have When