Canadian Securities Course (CSC) Practice Exam

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What do you call preferred shares that the holder can force the company to buy back as market rates rise?

Confirmation
Buy-in
Retractable preferreds
Delayed floater preferred

The correct answer is: Retractable preferreds

Retractable preferreds are a type of preferred shares that gives the holder the ability to force the company to buy back their shares as market rates rise. This means that if interest rates increase and the market value of the preferred shares falls, the holder can sell their shares back to the company at a predetermined price. This feature provides protection to the holder against potential losses in a rising interest rate environment. The other options, confirmation, buy-in, and delayed floater preferred, are not commonly used terms in finance and do not accurately describe the features of retractable preferreds.