The price of structured products may move up or down.
Structured investment products with caps and floors.
1 the duration of the.
Structured investments compete with a range of alternative investment vehicles such as individual securities mutual funds etfs exchange traded fund and.
An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price an example of a cap would be an agreement to receive a payment for each month the libor rate exceeds 2 5.
Many of these products pro vide a guaranteed return combined with some participation in the performance of the equity market.
Please also refer.
Carole bernardstructured investment products with caps and floors 1 32.
Interest rate floors are utilized in derivative.
Many years while the basic concept for these products originated in the united states in the 1980s.
This is a structured investment product which is not a protected deposit and is not protected by the deposit protection scheme in hong kong.
Structured investment products with caps and floors abstract structured products are popular with retail investors.
When initially investing in this product all structured annuities require the policyholder to make three choices that are essentially the same as an indexed annuity.
View detailed risk disclosure.
Structured investment products with caps and floors carole bernard university of waterloo phelim boyle wilfrid laurier university july 2008 insurance mathematics and economics dalian.
These option products can be used to establish maximum cap or minimum floor rates or a combination of the two which is referred to as a collar structure.
They are most frequently taken out for periods of between 2 and 5 years although this can vary considerably.
These contracts often have complex designs and in particular compli.
Structured products often provide the potential to offer higher returns but also carry more significant risks than the traditional mutual fund investment because of the types of underlying.
Interest rate caps floors and collars are option based interest rate risk management products.
An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product.