hybrid security

Hybrid Security

A security that combines two or more different financial instruments.

Notes:

Hybrid securities generally combine both debt and equity characteristics. The most common example is a convertible bond that has features of an ordinary bond, but is heavily influenced by the price movements of the stock into which it is convertible.

New types of hybrid securities are being introduced all the time to meet the needs of sophisticated investors. Some of these securities get so complicated that it's tough to define them as either debt or equity.

See also: Convertible Bond, Derivative, MIPS, QUIPS, Structured Finance

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Hybrid security

A convertible security whose optioned common stock is trading in a middle range, causing the convertible security to trade with the characteristics of both a fixed income security and a common stock instrument.

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hybrid security

A security that has features characteristic of two or more securities. A convertible bond, for example, is a hybrid security in that it has the features (that is, interest, maturity, and principal) of an ordinary bond but is heavily influenced by the price movements of the stock into which it is convertible.