Method and system for administering a discounted security

A computer-implemented financial method for replicating the performance of a combination of financial instruments as a single regulated security, said method comprising the steps of:

• automatically receiving at a processor of a programmed computer a price of an underlying security from a price source, the underlying security comprising one or more preferred or common stocks;
• setting, using the programmed computer, a minimum holding period exchange date and an exchange maturity date;
• structuring, using the programmed computer, an exchange traded exchangeable security with the minimum holding period exchange date and the exchange maturity date;
• setting, using the programmed computer, an option for exchanging the exchangeable security for a predetermined specific number of shares of the underlying security, the option commencing at a time beginning or later than the minimum holding period and ending at the predetermined exchange maturity date;
• providing, using the programmed computer, the exchangeable security with the option for exchanging the exchangeable security for a predetermined specific number of shares of the underlying security;
• setting, using the programmed computer, a pre-determined linked payment paid to a holder of the exchangeable security at the maturity date in response to the exchangeable security being tendered for the underlying security at a time on or after the minimum holding period through the maturity;
• providing, using the programmed computer, the exchangeable security with a link to the pre-determined linked payment;
• automatically determining, using the programmed computer, the amount of the pre-determined linked payment;
• setting, using the programmed computer, an offering price at a first time for the exchangeable security, wherein the offering price is the determined price of the underlying security;
• issuing, using the programmed computer, said exchangeable security;
• prior to the exchange maturity date, exchanging a full share of the underlying security for a share of the exchangeable security using the programmed computer;
• and
• prior to the exchange maturity date, declining payment of the amount of said pre-determined linked payment using the programmed computer.