floating-rate preferred stock investment & finance definition

A special and unusual type of preferred stock with a dividend that is reset at specified intervals according to a predetermined formula. Floating-rate preferred stock contrasts with most preferred stock issues that pay a fixed quarterly dividend. Floating-rate preferred stock issues do not generally fluctuate much in price because the dividend is automatically adjusted to keep the shares selling near to par. Also called adjustable-rate preferred stock, variable-rate preferred stock.