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Investment Risk Rating: Morgan Stanley Wealth Management’s hybrids and convertibles risk ratings assess the risk of each security based on a number of quantitative and qualitative factors, including the financial strength of the issuer, debt/equity ratio of the issuer, interest cover of the issuer, the issuer’s ability to pay distributions, conversion risk, dilution risk of conversion into equity, and duration risk. Risk ratings assess both the risk of the issuer and the specific risk of the actual security. An issue can be rated high risk for example, despite the issuer being of sound financial health, due to security specific terms which are security holder ‘unfriendly’, or there is a high degree of uncertainty (and therefore “redemption value”) on the exit and/or conversion conditions. Each security will then be given one of four ratings: Low Risk – a security is backed by an entity that has strong capacity to meet its financial obligations and commitments. 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