Classification of redeemable preferred stock. Bank of America has 81,000 shares, or $2.0 billion, of Rank of

Question:

Classification of redeemable preferred stock. Bank of America has 81,000 shares, or $2.0 billion, of Rank of America Floating Rate Noncumulative Preferred Stock outstanding. The preferred stock contract requires Rank of America to pay a quarterly cash on the preference of $25,000 per share at an annual rate equal to the greater of (a) three-month LIBOR plus 0.35%, and (b) 4.00%, payable quarterly in arrears. On any date on or after November 15, 2011, the may redeem this preferred stock, in whole or in part, at its option, at $25,000 per share, plus accrued and unpaid dividends. Discuss the classification of this preferred stock on the of Bank of America.

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