Dictionary of Banking Terms: money market preferred stock
money market preferred stock
class of preferred stock with a floating dividend rate. The dividend is reset every 49 days- the minimum time interval that holders own the stock, while claiming the 70% dividend tax exclusion-by investors who tender bids for the stock at a specific dividend rate. Money market preferred issues are meant to insure that preferred stock issues trade at, or close to par value, but have been known to fail if an offering fails to attract enough bids at the dividend rate desired by the issuer. Under the financial regulators' risk-based capital rules, money market preferred stock does not count toward a bank's primary capital or Tier 1 capital.
