Hybrid securities combine characteristics of equity and debt capital. “They usually give their holder the right to convert a debt-like instrument into common stock.” Sometimes a conversion obligation exists. Figure 11.1 illustrates the spectrum of hybrid securities according to their degree of resemblance to common stock and straight debt.


Stock Price Dividend Yield Common Stock Conversion Option Convertible Bond 
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© Deutscher Universitäts-Verlag|GWV Fachverlage GmbH, Wiesbaden 2006

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