Callable preferred stock,
Definition of Callable preferred stock:
Redeemable preferred stock, also known as callable preferred stock, is a popular means of financing for large companies, combining the elements of equity and debt financing. Redeemable preferred shares trade on many public stock exchanges. These preferred shares are redeemed at the discretion of the issuing company, where the stock is effectively bought back by the company. .
The situation in which a stockholder has the option to turn in the stock for any price at any time.
Callable preferred stock is a type of preferred stock in which the issuer has the right to call in or redeem the stock at a pre-set price after a defined date. Callable preferred stock terms, such as the call price, the date after which it can be called, and the call premium (if any) are all defined in the prospectus. However, callable preferred share terms laid at the time of issuance cannot be changed later. .
How to use Callable preferred stock in a sentence?
- Issuers use this type of preferred stock for financing purposes as they like the flexibility of being able to redeem it.
- Investors enjoy the benefits of preferred shares, while also usually receiving a call premium to compensate for reinvestment risk if the shares are redeemed early.
- Callable preferred stock is a variety of preferred shares that may be redeemed by the issuer at a set value before the maturity date.
Meaning of Callable preferred stock & Callable preferred stock Definition