Page 85 - PRIAA Glossary
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HURDLE RATE
The initial investment return that must be achieved by a hedge fund manager before receiving a part of the return. Until the fund earns this return, the return is credited to the investors. Once met, the hedge fund manager shares in the earnings and is compensated for the performance.
HYBRID BASKET
A basket containing underlyings from a combination of different asset classes (e.g., a basket containing equities and foreign exchange rates, or equities and commodities).
HYBRID INSTRUMENTS
Financial securities that possess the characteristics of different asset classes (i.e., hybrid characteristics). A classic example of a hybrid instrument is a convertible bond, which possesses the characteristics of both fixed-income debt and equity. This is a bond that can be converted into a specified number of shares of common stock.
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