If a corporation has 10% preferred stock outstanding and market rates decline to 8%, it makes sense that the corporation would like to eliminate the 10% preferred stock and replace it with 8% preferred stock. On the other hand, the holders of the 10% preferred stock bought it with the assumption of getting the 10% indefinitely. Anticipating such a situation, the preferred stock will usually have a stipulation that the corporation can "call in" (retire) the preferred stock at a certain price. This price is referred to as the call price and it might be 110% of the par amount (par plus one year's dividend).
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