A PERCS security that is designed to replicate its underlying mandatory conversion preferred stock. A key feature of this synthetic product is the involvement of no corporation to whose stock it is linked. Synthetic PERCS are essentially debt obligations on the originating company rather than equity of the company to whose shares they are tied. The coupon payment may be taxable as interest rather than as dividends. However, the basic features of the buy-write security are also available in synthetic PERCSs.
Derivatives
See also
- Equity Derivative Security
- Derivative Equity Security
- Synthetic Preferred Equity Redemption Cumulative Stock
- Synthetic PERCS
- Preference Equity Redemption Cumulative Stock (PERCS)
- Mexican Index-Linked Euro Security
- Preferred Equity Redemption Cumulative Stock (PERCS)Â
- Municipal Option Put Security
- ILS
- Index-Linked Security
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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