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Preferred habitat theory |
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Preferred habitat theoryA biased expectations theory that believes the term structure reflects the expectation of the future path of interest rates as well as risk premium. The theory rejects the assertion that the risk premium must rise uniformly with maturity, but instead profits that to the extent that the demand for and supply of funds do not match for a given maturity range, some participants will shift to maturities showing the opposite imbalances, as long as they are compensated by an appropriate risk premium whose magnitude will reflect the extent of aversion to either price or reinvestment risk.Preferred habitat theory Similar MatchesAdjustable rate preferred stockAdjustable rate preferred stockPreferred stock which pays a dividend in line with interest rates generally rather than a fixed dividend. Prior preferred stockPrior preferred stockPreferred stock that has a higher claim on all dividends and assets in liquidation than claims of other preferred stock. First preferred stockFirst preferred stockA type of preferred stock that has priority over other preferred issues and common stock when claiming dividends and assets. Cumulative preferred stockCumulative preferred stockPreferred stock with dividend payment priority following a missed dividend payment. This amount accumulates with subsequent dividends and when next a dividend is declared no payments can be made to common stockholders until cumulative preferred stockholders have been paid in full. Preferred dividend coveragePreferred dividend coverageNet income after interest and taxes (before common stock dividends) divided by preferred stock dividends. Further SuggestionsPreferred equity redemption stock (PERC)Convertible preferred stock Cumulative preferred stock participating preferred stock Second preferred stock Depository preferred Floating rate preferred Preferred stock Blank Check Preferred Stock Auction Market Preferred Stock (AMPS) Dutch Auction Preferred Stock Auction rate preferred stock (ARPS) Preferred stock agreement preferred stock Preferred stock ratio Monthly income preferred security (MIP) Adjustable rate preferred stock (ARPS) Participating preferred stock |
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