HomeDefinitionsCompareDebt Preferred habitat theoryThe financial definition for Preferred habitat theory:A biased expectations theory that believes the term structure reflects the expectation of the future path of interest rates as well as risk premium. The theory rejects the assertion that the risk premium must rise uniformly with maturity, but instead profits that to the extent that the demand for and supply of funds do not match for a given maturity range, some participants will shift to maturities showing the opposite imbalances, as long as they are compensated by an appropriate risk premium whose magnitude will reflect the extent of aversion to either price or reinvestment risk. Similar MatchesAdjustable rate preferred stock (ARPS)Adjustable rate preferred stock (ARPS)Publicly traded issues that may be collateralized by mortgages and MBS Auction Market Preferred Stock (AMPS)Auction Market Preferred Stock (AMPS)A type of Dutch Auction Preferred Stock (A Merrill Lynch product). Auction rate preferred stock (ARPS)Auction rate preferred stock (ARPS)Floating-rate preferred stock, whose dividend is adjusted every seven weeks through a Dutch auction. Further SuggestionsBlank Check Preferred StockConvertible preferred stock Cumulative preferred stock Depository preferred Dutch Auction Preferred Stock First preferred stock Floating rate preferred Click to compare definitions of Preferred habitat theory Click to view definitions beginning pr |