A combination of a debt instrument and a derivative instrument such as equity option, equity swap, currency forward, currency futures, currency swap, commodity option, commodity futures, or commodity swap. Though these hybrids possess a debt-like element, but they still derive their value from an underlying asset that is usually another security.

In general, a hybrid security has the characteristics of both debt and equity (debt financing and equity financing). Examples include preference shares which provide the holder with a fixed dividend payment (debt-type feature) and ownership (equity-type feature). Other hybrids include financial leases, convertible securities, warrants, etc.