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Convertible Adjustable Preferred Stock (CAPS)
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A floating rate preferred issue, convertible by the holder on dividend payment dates into a variable number of the issuer's common shares. The shares received upon conversion are equal in market value to the par value of the preferred (usually subject to a cap on the number of shares). The convertible feature is designed to give the adjustable rate preferred investor greater liquidity and to protect the preferred investor's principal if the credit standing of the issuer declines. Also called Capital Market Preferred Stock (CMPS).
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