Retractable Preferred Shares

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.

BREAKING DOWN '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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RELATED FAQS
  1. 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 >>
  2. What are preferred shares?

    Understand what preferred shares are. Learn about both the benefits and the drawbacks of preferred shares, which effects ... Read Answer >>
  3. Why would a company issue preference shares instead of common shares?

    Learn about some reasons that corporations might issue preference shares and why investors might value them more than common ... Read Answer >>
  4. 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 >>
  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 >>
  6. What is the difference between redemption of shares and repurchase of shares?

    Sometimes, shares of stock offered by a company are not regular, market-driven common shares. Instead, they may be preferred ... Read Answer >>
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