Retractable Preferred Shares

AAA

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.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Dividend

    A distribution of a portion of a company's earnings, decided ...
  3. Security

    A financial instrument that represents: an ownership position ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Stock Dividend

    A dividend payment made in the form of additional shares, rather ...
Related Articles
  1. Investing Basics

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  2. Bonds & Fixed Income

    A Primer On Preferred Stocks

    Offering both income and relative security, these uncommon shares may work for you.
  3. Active Trading

    Don't Let Stock Prices Fool You

    Find out why a stock with a six-figure share price can still be a good value.
  4. Bonds & Fixed Income

    Introduction To Convertible Preferred Shares

    These securities offer an answer for investors who want the profit potential of stocks but not the risk.
  5. Options & Futures

    4 Steps To Picking A Stock

    Narrow down the universe of stocks to find the ones that best suit your needs.
  6. Economics

    When Stock Prices Drop, Where's The Money?

    Market perception can create money - and make it disappear into thin air.
  7. Bonds & Fixed Income

    Should Junk Bond ETFs Be a Part of Your Portfolio?

    Should junk bonds be a part of your portfolio? Here's what you need to know.
  8. Professionals

    Vanguard Readies Muni Bond ETF

    Vanguard is set to roll out a muni bond ETF, the firm's first.
  9. Mutual Funds & ETFs

    Is the TLT ETF a Good Bet for the Long Run?

    Is the iShares 20+ Year Treasury Bond ETF (TLT) a good bet for the long run?
  10. Bonds & Fixed Income

    African Equities vs. Bonds: Risks and Rewards

    A look at the risks and rewards of exposure to African equities vs. bonds.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center