Series 6: 4.1.2.3. Trading Preferred Stock

4.1.2.3. Trading Preferred Stock

Preferred stocks trade in the secondary market, but price fluctuations are caused by changing interest rates rather than increases and decreases in company earnings. As with bonds, preferred stock appreciates in value with falling interest rates and decreases with rising interest rates. When interest rates fall, the price of the preferred stock will usually rise above par