Hybrid

An instrument whose returns depend on a combination of risk types or which has been constructed from several different instruments to produce returns which mimic those of another instrument. A common hybrid is the combination of interest rate or currency swaps and barrier or digital options on other asset classes. Another hybrid, a convertible bond generally has a coupon that pays interest, so it behaves somewhat like a credit market instrument. However, its imbedded conversion feature also makes it behave like an equity instrument. Other hybrids are a zero-coupon bonds and perpetuals.