Sample Structured Products Transactions Flow
[1] Client Investment
$100 million
$100 million
[2] Structured Product
Fixed income security issued by major Bank or Broker Dealer (usually AA rated with 3-5 year maturity)
Fixed income security issued by major Bank or Broker Dealer (usually AA rated with 3-5 year maturity)
[3] Use of proceeds by Issuer
Collateral Account (Cost: $75,000,000): Purchase $100 million of zero coupon bonds with five years until maturity
Investment Account (Cost: $25,000,000): Purchase of call options on investment strategy (absolute return generator)
Collateral Account (Cost: $75,000,000): Purchase $100 million of zero coupon bonds with five years until maturity
Investment Account (Cost: $25,000,000): Purchase of call options on investment strategy (absolute return generator)
[4] Client Investment Return at Maturity
100% of Principal and Profit from positive return of investment strategy (commodity, hedge fund, equity)
100% of Principal and Profit from positive return of investment strategy (commodity, hedge fund, equity)
Risk Disclosure
The above example is for informational purposes only and so should not be construed by a consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Investments in structured products involve counterparty credit risks and client losses may occur. Past performance of structured products is not indicative of their future performance. This material on structured products contains opinions of Roundstone regarding the benefits of structured product investing which may be subjective in nature.
Please see the full Risk Disclosure for a more detailed listing of the risks pertaining to Structured Products.
