reuters 3000 xtra university of hong kong trading workshop david lo class 12 structured products...
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REUTERS 3000 XTRA
University of Hong KongUniversity of Hong Kong
Trading WorkshopTrading Workshop
David Lo
Class 12Class 12
Structured Products & Assignments ReviewStructured Products & Assignments Review
REUTERS 3000 XTRA
Structured Notes
Can SN provide capital protection, leverage, yield
enhancement, and customized risk-return profiles ?
Equity Linked Note
Currency Linked NoteCredit Linked Note
Guaranteed Note Range Accrual Note
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Today Menu :
• Guaranteed Note
• Equity Linked Note
• Currency Linked Note
• FX Range Accrual Note
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What are structured notes?
• A structured note is a security that combines the features of a fixed income instrument or a short-term deposit with the risk and return characteristics of embedded derivative contracts.
• OR Structured notes pay a return linked to the performance of an underlying benchmark such as interest rates, equity markets, commodities, corporate credits or foreign exchange markets.
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Why have structured notes become popular?
In the low interest rate environment, earning a respectable rate of return became increasingly difficult. Structured notes with its cash flows and market values linked to one or more benchmarks offer the potential for greater returns than prevailing market interest rates. Yield enhancement is achieved in most cases by selling options.
•
By combing option contracts in varying degree to deposits or fixed income instruments, customized risk-return profile and leverage can be tailored to different investors.
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The decrease in the size of note denomination has allowed retail investors to participate. The principal-protected products are particularly popular amongst retail investors in Asia and Europe.
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Assignments Review
• Assignment 1
• Assignment 2
• Assignment 3
