Hybrid Securities

Submitted by Sharemarket News on 28 April, 2011 - 16:12

Hybrid securities or 'hybrids' are a combination of two or more financial instruments. In general, hybrid securities combine the characteristics of both debt and equity. A common hybrid is a convertible bond. Convertible bonds feature the standard bond, but it is influenced by stock price movements into which it can be converted.

Hybrids are generally popular with retirees because these investments yield higher returns than cash accounts. Hybrids usually pay investors a steady income that is slightly higher than the bank rate. Riskier hybrids pay higher interests (coupon/preferred dividend).

Glossary List

Recommended Websites