Which type of preferred stock allows the issuer to reclaim the shares?

Callable preferred stock is a type of preferred equity that grants the issuer the right to repurchase the shares at a predetermined price after a specified date. This feature allows companies to call back the stock if, for example, interest rates decline or if corporate circumstances change, enabling the company to replace it with cheaper financing options or to manage its capital structure more effectively.

For investors, callable preferred shares can offer higher yields to compensate for the potential loss of benefits associated with being called, such as dividends that would not be received if the shares are redeemed early. This attribute sets callable preferred stock apart from other types like convertible, cumulative, and participating preferred stock, which do not inherently provide the same reclaim feature.

Convertible preferred stock can be exchanged for a specified number of common shares, but it does not allow the issuer to reclaim the shares. Cumulative preferred stock ensures that unpaid dividends accumulate and must be paid before any common dividends, while participating preferred stock allows shareholders to receive additional dividends beyond the stated rate under certain conditions, neither of which involve the issuer's ability to call back the stock.