STUDY OF HYBRID FINANCIAL INSTRUMENTS Bachelor of Commerce Semester V Academic Year 2013-14 Submitted by Chetan Rajendra Godambe Roll

No. 3576 ST. GONSALO GARCIA COLLAGE Vasai, Dist. Thane

STUDY OF HYBRID FINANCIAL INSTRUMENT Bachelor of Commerce Semester V Submitted In Partial Fulfilment of the requirements For the Award of Degree of Bachelor of Commerce Banking & Insurance By Chetan Rajendra Godambe Roll No. 3576 ST. GONSALO GARCIA COLLAGE Vasai, Dist.Thane

ST. GONSALO GARCIA COLLEGE Vasai, Dist. thane

CERTIFICATE

This is to certify that Shri. CHETAN RAJENDRA GODAMBE, Roll No. 1O student of B.Com. Banking & Insurance Semester V (2013-14). Has successfully completed the project on STUDY OF HYBRID FINANCIAL IINSTRUMENT under the guidance of Mrs. Celsa Dsouza.

COURSE CO-ORDINATOR

PRINCIPAL

INTERNAL EXAMINER

EXTERNAL EXAMINER

DECLARATION I am Chetan Rajendra Godambe the Student of B.Com. Banking & Insurance Semester V (2013-14) hereby declare that I Have completed the Project on Study of Hybrid Financial instruments. The information submitted is true and Original to the best of my knowledge.

Chetan Rajendra Godambe Roll No. 3576

ACKNOWLEDGMENT
It is really a matter of pleasure for me to get an opportunity to thank all the persons who contributed directly or indirectly for the successful completion of the project report, STUDY OF HYBRID FINANCIAL INSTRUMENTS. First of all I am extremely thankful to my college ST. GONSALO GARCIA COLLEGE for providing me with this opportunity and for all its cooperation and contribution. I also express my gratitude to my Project mentor and guide Mrs. Celsa Dsouza I am highly thankful to our respected project guide for giving me the encouragement and freedom to conduct my project. I am also grateful to all my faculty members for their valuable guidance and suggestions for my entire study.

Chetan R. Godambe Roll No.: 3576

Table of contents

Chapter no. 1 2 3 4 5 6 7 8

Contents INTRODUCTION, MEANING & DEFINATION FEATURES, OVERVIEW & BENIFITS TYPES RISK INVOLVED & OBJECTIVES CLASSES PURPOSE & INNOVATIVE HYBRIED FINANCING KEY FACTORS AFFECTING STRUCTURE OF HYBRID & RECENT TRENDS CASE STUDIES CONCLUSION, BIBLIOGRAPHY & WEBLIOGRAPHY

Page no. 1-8 9-15 16-25 26-32 33-42 43-47 48-53 54-56

Executive Summary:
Hybrid securities are complex capital instruments issued by companies to diversify their funding base and manage their cost of capital. These securities possess characteristics of both debt and equity, and incorporate various features that may make them more debt-like or more equity-like. This in turn impacts the performance of the income and capital return components of the securities. Hybrid securities have been promoted as investments that offer stable and defensive income streams. However, unlike senior debt securities, the income on hybrids can be deferrable and hybrid instruments rank below senior debt securities in the capital structure which makes them riskier investments. Our analysis shows that hybrids perform like debt when equity markets perform well, and perform like equity when equity markets perform poorly. In this project I explore some of the key features associated with hybrid instruments and identify risks associated with investing in these securities. We also outline our investment process which involves considering credit risk at the issuer level as well as analysing the features of a hybrid instrument against safer senior debt and subordinated debt investments, to assess their value-add to a fixed income portfolio.

Objective of Study
The project analysis is undertaken to comply with following objectives 1) To study financial performance of Hybrid Financial Instruments.

2) To find benefits of Hybrid Financial Instruments for investors.

3) To study various types of the hybrid Instruments.

4) To find reasons for investing in the Hybrid financial Instruments. 5) To find risk involve in Hybrid Financial Instrument.