Trust preferred securities were a type of bank-issued securities with characteristics of both debt and equity.
They were largely abolished by laws and regulations following the financial crisis of 2008-2009.
Issued by banks or bank holding companies through the issuance of debentures, TruPS are preferred shares of a trust.
Trust preferred securities generally offer higher periodic payments than preferred shares and can have a maturity of up to 30 years.
The downside of TruPS to the issuer is the cost, as investors demand higher returns on investments with provisions such as interest deferrals or early repayments.
Asset-Backed Securities (ABS) are financial securities backed by income-producing assets such as credit card receivables, home equity loans, student loans, and auto loans.
Forward interest rate agreements (FRAs) are over-the-counter contracts between parties that specify an interest rate to be paid on an agreed date in the future.
A holding company depositary receipt (HOLDR) was a diversified investment product offered by Merrill Lynch that gave investors access to multiple shares in a particular industry or sector through a single holding.
Interest rate swaps are forward contracts in which one stream of future interest payments is exchanged for another based on a specified principal amount.
Risk acceptance or risk containment is a conscious strategy of recognizing the possibility of small or rare risks without taking measures to hedge, hedge or avoid these risks.
Arbitrageurs are investors who exploit market inefficiencies of any kind. They are necessary to ensure that inefficiencies between markets are smoothed out or kept to a minimum.
Audit risk is the risk that the financial statements will be materially incorrect, even if the auditor’s report indicates that the financial statements do not contain any material misstatement.
A beneficial owner is a person who enjoys the benefits of ownership, despite the fact that the ownership of the property is registered in a different name.