Business and Personal Finance Dictionary

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• PERCS
  
  Preference Equity Redemption Cumulative Stock. Preferred stock in Corporation A that behaves on the downside like common stock in Corporation A, but contains an embedded short Call Option on that stock. The PERCS is a descendant of the Prime of the early 1980s, which was itself a descendant of the hoary Buy-Write (q.v.) strategy. (See Pratt, Tom. "You can't keep a lid on public derivatives." IDD, Oct. 24, 1994, pp. 12-18.) The PERCS is like a ELKS (q.v.), except that the company that the company that issues the stock issues the PERCS, and another company issues the ELKS. Morgan Stanley issued the first PERCS in 1991.3.375
  
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