Important Terms
- Returns: Predictable dividend, often franked therefore possible tax advantage to the holder
- Capital price:
-
- Price moves in line with share price (fixed conversion terms e.g. 1 hybrid convert to 1 share)
- Bond like, price does not move in line with share price (variable conversion terms, face value (usually $100) convert to $100 worth of shares).
- Discount: A discount is usually offered to the share price at the time of conversion.
- Reset/resettable: At the reset date the terms of the security (dividend rate, next reset date) may change. The holder can elect to accept the new reset terms or convert into shares.
- Cumulative/non-cumulative This refers to the event of missed dividend payments.
-
- Cumulative: missed dividend payments are added to the next dividend payment.
- Non-cumulative: missed dividend payments are forgone.
- Redeemable/non-redeemable
-
- Redeemable: At certain times the holder may have the option to sell the securities back to the company at the face value/issue price.
- Non-redeemable / irredeemable: The company is not offering to buy the securities back.
Read more about this topic: Hybrid Security
Famous quotes containing the words important and/or terms:
“It’s important as a writer to do my art well and do it in a way that is powerful and beautiful and meaningful, so that my work regenerates the people, certainly Indian people, and the earth and the sun. And in that way we all continue forever.”
—Joy Harjo (b. 1951)
“A radical is one of whom people say “He goes too far.” A conservative, on the other hand, is one who “doesn’t go far enough.” Then there is the reactionary, “one who doesn’t go at all.” All these terms are more or less objectionable, wherefore we have coined the term “progressive.” I should say that a progressive is one who insists upon recognizing new facts as they present themselves—one who adjusts legislation to these new facts.”
—Woodrow Wilson (1856–1924)