hybrid instrument

(noun)

A broad group of securities that pay a predictable (fixed or floating) rate of return or dividend until a certain date, at which point the holder has a number of options including converting the securities into the underlying share.

Examples of hybrid instrument in the following topics:

  • Preferred Stock

    • Preferred stock (also called preferred shares, preference shares or simply preferreds) is an equity security with properties of both an equity and a debt instrument , and is generally considered a hybrid instrument.
    • In other words, in the case of liquidation or bankruptcy, preferred stock will have claim to assets before common stock, but after corporate bonds or other debt instruments.
    • Preferred Stocks are considered a hybrid security with properties of both stocks and bonds, but are subordinate to bonds when it comes to rights of claim to company assets.

  • The Cost of Preferred Stock

    • Preferred stock is an equity security with properties of both an equity and a debt instrument.
    • It is generally considered a hybrid instrument.

  • Common and Preferred Stock

    • It has properties of both an equity and a debt instrument, making it a "hybrid instrument".

  • Dividend Preference

    • Preferred stock (also called preferred shares, preference shares or simply preferreds) is an equity security with properties of both an equity and a debt instrument, and is generally considered a hybrid instrument.

  • Issuing Stock

    • Preferred stock is considered a hybrid financial instrument because the shares have properties of both equity and debt.

  • Convertible Stock

    • Preferred stock (also called preferred shares) is an equity security with properties of both an equity and a debt instrument, and is generally considered a hybrid.

  • Types of Market Organizations

    • The secondary market, also known as the aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold.
    • Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities, or derivatives directly between two parties.
    • Hybrids of these types may also exist.
    • This person or company quotes both a buy and a sell price in a financial instrument or commodity held in inventory.

  • Comparing Common Stock, Preferred Stock, and Debt

    • Preferred shares act like a hybrid security, in between common stock and holding debt.
    • In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.

  • Overview of Convertible Securities

    • It is a hybrid security with debt and equity-like features.
    • Although a CB typically has a coupon rate lower than that of similar, non-convertible debt, the instrument carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's equity value.
    • In theory, when a stock declines, the associated convertible bond will decline less, because it is protected by its value as a fixed-income instrument.

  • The Common Financial Instruments