A financial product that combines two products or more, or that combines a specific number of products with add-on features that change its risk-return profile. In other words, a hybrid product has the combined features of multiple distinct components such as equity, debt, derivative, insurance (protection), etc. A structured note is a hybrid financial product that combines a bond (or a note) with a derivative involving a specific underlying benchmark.

Other examples of hybrid products include convertibles, participating bonds, credit cards, fixed index annuity, basket products (performance baskets), investment-linked plans (ILPs), etc.

Specifically, a convertible is a hybrid product/ instrument (part debt and part equity) that gives the holder the right, but not the obligation, to exchange his bond and forfeit future interest payments and redemption of principal usually at any time (i.e., American-style exercise) in return for a preset number of shares. The number of shares receivable per bond is referred to as the conversion ratio. Although no cash flow is exchanged when a convertible bond is converted into stock, the effective price at which the holder can purchase shares (the conversion price) is equal to the par value of the bond divided by the conversion ratio.