Define redeemable preferred stock.

• A. A stock that can be redeemed by the issuer at a specified date, or after notice, for a specified price
• B. A stock with no maturity date
• C. A stock issued by non-profit organizations
• D. A common stock with preference in voting rights

Answer: (A)

Redeemable preferred stock is a type of preferred stock that includes a redemption feature, meaning the issuer has the right to buy the shares back on a specified date or after giving notice, at a predetermined price. This makes the security have a defined exit for the investor and a finite horizon for the issuer’s equity obligation. It combines fixed, priority dividends typical of preferred stock with a debt-like obligation to return principal at a set time and price. The other descriptions don’t capture this redeemable element: perpetual or non-redeemable stock lacks a fixed redemption date, nonprofits don’t issue corporate stock, and voting-preference isn’t a defining feature of redeemable preferred stock.