- American Depositary Receipts (ADRs)
- American brokers function as intermediaries in the purchase and sale of foreign issues by acting as conduits for shares that are listed on international exchanges. A broker retains shares in a pool, which are represented by salable depositary receipts.
- Asset-Backed Securities (ABS)
- Mostly AAA-rated securities secured by consumer credit card receivables. These issues are credit-enhanced by overcollateralization, letters of credit, and subordination of portions of cash flow to cushion against any losses is the underlying receivables.
- Collateralized Mortgage Obligations (CMOs)
- A multiclass bond backed by a pool of mortgage pass-through securities or mortgage loans.
- Common Stock
- A security that represents equity ownership in a corporation, although the right to residual claims on corporate assets is subordinated to the rights of debt holders in the event of liquidation. Further rights guaranteed by common stock ownership can generate entitlements that have intrinsic marketable value. These include rights offerings, or preemptive rights, which entitle the holder to purchase shares of a new stock issuance at a price somewhat below the current market price; usually the right has a duration of 90 days following the issuance of new common stock. Warrants provide the holder the right to purchase a fixed number of shares of common stock at a predetermined price during a specific period, though some warrants are perpetual. Warrants are created by a corporation to facilitate the sale of debt or preferred stock.
- Convertible Debt Instruments
- These securities act like convertible equity issues, but have fundamental pricing differences. Usually, the conversion on bonds is expressed as a conversion price rather than as a ratio, as is the case with convertible equity issues.
- Convertible Preferred Equity Issues
- The convertible preferred equity issue can be exchanged, at the shareholder's option and at any prespecified ratio or at a preestablished conversion price, for shares of a company's common stock. The conversion ratio is the par or stated value of the preferred stock divided by the purchase price; conversions of equity issues usually occur at a conversion ratio as opposed to a particular price.
- Convertible Securities
- Debt instruments and equity securities that are convertible into forms of common stock. These issues are particularly useful in new ventures when the founders are seeking capital, and include several types of both convertible equity and convertible bond issues.
- Index Fund
- Mutual fund whose portfolio matches that of a broad-based index such as Standard & Poor's 500 Index and whose performance therefore mirrors the market as a whole.
- Investment Ratings
- Various ratings services publish analyses on the array of investment instruments currently available on the markets. Among the most widely known fixed-income ratings services are Moody's, Standard & Poor's (S&P), and Fitch. Their investment ratings are as follows:
| Company |
High Quality |
Quality |
Below Investment Grade |
Very Poor Quality |
S&P, Fitch
Moody's |
AAA–AA
Aaa–Aa |
A–BBB
A–Baa |
BB–B
Ba–B |
CCC–D
Caa–C |
- Preferred Equity Redemption Cumulative Stock (PERCS)
- A type of convertible preferred stock, PERCS shares automatically convert to common stock at the termination of a three-year period, unless called prior to that by the issuer. A cap is set on the conversion value, generally at about 30 percent above the common stock price at the time the preferred stock is issued. If at the end of the three-year period the stock is trading at or below the common stock price, holders receive one share of common stock for each PERCS share. PERCS shares are marketable, although, as with all equity securities, a market is never guaranteed.
- Preferred Stock
- An equity issue that has fixed-income characteristics; preferred shares have a fixed dividend, which is stated as a percentage of par value. These shares usually do not have preemptive rights or voting rights, though they are senior to common shares in terms of liquidation claims.
- Real Estate Mortgage Investment Conduits (REMICs)
- Various mortgage tranches, or classes of bonds, are offered (e.g., planned amortization class, inverse floaters, sequential pay, etc.).
- Rule 144 Stock
- A pool of common shares that has been authorized by a corporation's board of directors and that is usually not entirely disbursed or marketed for sale, but is held in an internal pool known as treasury stock. A certain number of shares from this pool is often set aside for internal distribution, and hence is never registered with the Securities and Exchange Commission. Prior to registration, these Rule 144 shares are not used in calculations of a company's worth such as P/E ratios or book value.