Convertible Adjustable Preferred Stock - CAPS


DEFINITION of 'Convertible Adjustable Preferred Stock - CAPS'

A preferred, floating rate issue, whose interest rate is tied to Treasury security rates. They can be exchanged for common stock or cash after the next period's dividend rates are announced. The shares received upon conversion are equal in market value to the par value of the preferred.

BREAKING DOWN 'Convertible Adjustable Preferred Stock - CAPS'

The convertible feature is designed to protect the preferred investor's principal and provide greater liquidity in case the issuer's credit rating declines.

  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  3. Common Stock

    A security that represents ownership in a corporation. Holders ...
  4. Conversion Price

    The price per share at which a convertible security, such as ...
  5. Contingent Convertibles - CoCos

    A security similar to a traditional convertible bond in that ...
  6. Convertibles

    Securities, usually bonds or preferred shares, that can be converted ...
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