Retractable Preferred Shares

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DEFINITION of 'Retractable Preferred Shares'

A specific type of preferred stock thats lets the owner sell the share back to the issuer at a set price. Typically, the issuer can force the redemption of the retractable preferred share for cash at maturity. Sometimes instead of cash, retractable preferred shares can be exchanged for common shares of the issuer.

INVESTOPEDIA EXPLAINS 'Retractable Preferred Shares'

This type of stock resembles a fixed-income bond but pays dividends instead of interest. The retractable feature allows for the value of these shares to remain steady at or above par value, as compared to the price of traditional preferred shares which fluctuate with changes in interest rates.

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