FOLITIC / HYBRID SECURITIES

Hybrid Securities Trading Guide

Understand securities that combine features of debt, equity and derivatives. Follow eight stages covering preferred shares, convertibles, corporate hybrids, bank capital and structured notes.

Start with What makes a security a hybrid, then follow the next lesson links. Explore 32 lessons with worked examples, exercises and further reading.

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Preferred Shares and Income · All lessons

Preferred Shares and Income

Understand dividends, priority, reset rates, redemption and the limits of income protection.

Beginner

Preferred shares and their priority over common equity

Preferred shares usually sit ahead of common equity for distributions and liquidation, but behind creditors. Their priority is contractual protection, not a promise of repayment.

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Beginner

Cumulative and noncumulative dividends

Cumulative dividends retain an arrears claim under the terms, while noncumulative dividends generally do not. Neither label removes the need to examine payment discretion and issuer...

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Beginner

Fixed floating and reset distributions

A floating or reset distribution changes according to a formula. Learn the benchmark, margin and reset schedule before treating the quoted rate as lasting income.

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Beginner

Callable preferred shares and the risk of paying above par

An issuer call can return a security at a contractual amount below your purchase price. Evaluate the redemption scenario before interpreting an attractive distribution yield.

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