The Floating Rate Feature on Preferred Stock Causes More Volatility

question 90

True/False

The floating rate feature on preferred stock causes more volatility in its price.

---

Definitions:

Product Differentiation

A business tactic employed to differentiate their product in the market from those that are similar.

Marginal Revenue

The increase in income resulting from the sale of an extra unit of a good or service.

Average Revenue Curve

A graphical representation showing how the average revenue per unit sold varies with the quantity sold.

Perfect Competition

A market structure characterized by many firms offering identical products, free entry and exit of firms, and full information availability, leading to efficient outcomes.