Hybrid investments, also known as

derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics * Brzozowski derivative in the theory of formal languages * Formal derivative, an ...

or just hybrids, are a form of investment that combines

equity Equity may refer to: Finance, accounting and ownership * Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the dif ...

and

debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...

like features, allowing companies to protect themselves against financial risks in securities transactions. This form of investment is essential for traders and investment professionals to diversify their

asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...

portfolio Portfolio may refer to: Objects * Portfolio (briefcase), a type of briefcase Collections * Portfolio (finance), a collection of assets held by an institution or a private individual * Artist's portfolio, a sample of an artist's work or a ...

. Hybrid Investments work to maintain a sense of security for both the business and investor. Types of Hybrid Investments The two most popular types of Hybrid Investments are Preferred

Stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

and Convertible Bonds. Preferred Stocks –

Stockholders A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...

receive dividend payments on a regular basis and gain funds when share values rise on security exchanges. Convertible Bonds – Bondholders periodically receive interest payments. An exchange of bonds for a specified number of equity shares is acceptable, but only in accordance with the convertible bond covenant. Investors buying these products look to accumulate periodic

fixed-interest A fixed interest rate loan is a loan where the interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount len ...

payments and profit when share prices rise in

financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets ...

. New types of Hybrid Investments are constantly being introduced to meet the needs of professional investors.

References

Phoenix Investments
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