Auction Market Preferred Stock - AMPS

DEFINITION of 'Auction Market Preferred Stock - AMPS'

A type of dutch auction that involves a process used to reset the interest payments, or dividends, that are paid on preferred stock or mutual fund shares. The auction usually takes place through an intermediary, and will reset the dividend paid every 49 days (more or less).

Auction market preferred stock is also known as auction rate preferred stock.

BREAKING DOWN 'Auction Market Preferred Stock - AMPS'

The auction market preferred stock can be a beneficial investment for larger investors. The auction process will most likely reveal the current market yield for less-risky asset classes, such as preferred stock, and will self-adjust for the effects of alternative investments and inflation.

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RELATED FAQS
  1. What are some examples of preferred stock, and why do companies issue it?

    Understand the difference between preferred stock and common stock, and learn the primary reasons why companies issue preferred ... Read Answer >>
  2. What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
  3. How does preferred stock differ from company issued bonds?

    Discover the primary differences between preferred stock and corporate bonds, two income-generating investment vehicles issued ... Read Answer >>
  4. Why do preferred stocks have a face value and why is it different than market value?

    Read about the differences between the face value and market value of a preferred stock, including why preferred stocks often ... Read Answer >>
  5. What is the difference between preference and ordinary shares?

    Learn about the main differences between preference and ordinary shares including how dividends are paid for both types of ... Read Answer >>
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    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Answer >>
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