Preferred Redeemable Increased Dividend Equity Security - PRIDES

AAA

DEFINITION of 'Preferred Redeemable Increased Dividend Equity Security - PRIDES'

First introduced by Merrill Lynch, PRIDES are synthetic securities consisting of a forward contract to purchase the issuer's underlying security and an interest bearing deposit. Interest payments are made at regular intervals, and conversion into the underlying security is mandatory at maturity.

INVESTOPEDIA EXPLAINS 'Preferred Redeemable Increased Dividend Equity Security - PRIDES'

Similar to convertible securities, PRIDES allow investors to earn stable cash flows while still participating in the capital gains of an underlying stock.This is possible because these products are valued along the same lines as the underlying security.

RELATED TERMS
  1. Forward Contract

    A customized contract between two parties to buy or sell an asset ...
  2. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  3. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  4. Synthetic

    A financial instrument that is created artificially by simulating ...
  5. Surrender Period

    The amount of time an investor must wait until he or she can ...
  6. Accelerated Dividend

    Special dividends paid by a company ahead of an imminent change ...
Related Articles
  1. Investing Basics

    How To Create A Modern Fixed-Income Portfolio

    Exposure to different asset classes is required to generate income, reduce risk and beat inflation. Find out how bonds can help.
  2. Bonds & Fixed Income

    The Impact Of An Inverted Yield Curve

    Find out what happens when short-term interest rates exceed long-term rates.
  3. Mutual Funds & ETFs

    The Bond Market: A Look Back

    Find out how fixed-income investments evolved in the past century and what it means today.
  4. Options & Futures

    Introduction To Inflation-Protected Securities

    Inflation is an enemy to investors - except to those who invest in IPS, which guarantee a real rate of return with no credit risk.
  5. Bonds & Fixed Income

    Asset Allocation In A Bond Portfolio

    An investor's fixed-income portfolio can easily beat the average bond fund. Learn how and why!
  6. Fundamental Analysis

    How do I calculate dividend payout ratio from a balance sheet?

    Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement.
  7. Investing Basics

    What is the effect of price inelasticity on demand?

    Find out why price inelasticity of demand shows the relationship between demand and price if the price of an inelastic good is either lowered or raised.
  8. Options & Futures

    What is the average annual dividend yield of companies in the forest products sector?

    Investing in the forestry sector can provide investors a degree of stability through dividend-paying stocks that are in line with market averages.
  9. Fundamental Analysis

    What is the average annual dividend yield of companies in the oil & gas drilling sector?

    Investing in oil and gas drilling companies can provide income investors a promising addition to dividend-focused portfolios due to higher than average yields.
  10. Bonds & Fixed Income

    What are the benefits and drawbacks of owning preferred stock and common stock?

    Owning a share of a company can be accomplished through the purchase of common or preferred stock, but there are benefits and drawbacks for each option.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center