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Contrary to the warrant-like capital notes described above, these capital notes are usually not convertible, so they represent no current or future stake in the corporation's equity (
286:. Investors who buy the capital notes are the first in line to bear risk if the cash flows from the SIV's assets are insufficient to cover promised payments to all investors. See
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horizon, reaching several decades (sometimes as much as 50 or 100 years). Unlike equity securities, these capital notes
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of shares, is paid when the capital note is issued). Capital notes may be issued in connection with a
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and other financial institutions issue these bonds to satisfy regulatory demands regarding
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for more details on how the process of slicing up risk (or "tranching") works.
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in the issuing corporation's order of priorities in claims for its assets.
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mature at some point; therefore, they form part of the company's
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274:is the most junior security issued by a
175:vehicles. Capital notes are similar to
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