What is “callable preferred stock”? Why do corporations issue such stock?

What is “callable preferred stock”? Why do corporations issue such stock?

What is “callable preferred stock”? Why do corporations issue such stock? Given the different features that are associated with stock (callable, cumulative, preferred, etc.), what type of stock would you want to buy personally and why?

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Callable Preferred stocks are stocks that have the option of retirement by the issuing company. They may be retired under differently stated circumstances. The issuing company usually repurchases the stock at the par value or a slightly high rate known as call premium. Companies that issue this kind of stock normally redeem them when market interest rates decline. The Issuers always opts to call in the high-return preferred stocks and replace them with the lower rate issues. This is done to avoid paying high dividend rates when the market rate falls (Mayo, 2004). For example, a company that had issued…………………

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