Preferred Redeemable Increased Dividend Equity Security - PRIDES

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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. Convertible Preferred Stock

    Preferred stock that includes an option for the holder to convert ...
  3. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  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 ...
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