What describes an Adjustable Rate preferred stock?

• A. Dividend fixed
• B. Dividend tied to an index
• C. Cumulative dividend
• D. Participating dividend

Answer: (B)

Adjustable Rate preferred stock is defined by a dividend that changes over time based on a benchmark rate. The dividend is reset periodically to reflect current interest rates, typically described as the benchmark or index plus a spread. This makes the payout fundamentally tied to an index or reference rate rather than being fixed. Features like whether the dividends are cumulative or participating are separate traits and don’t define the adjusting nature.