Hi
In the notes it states on page 41 of Chapter 5 that
in some, more complex, structured products, the amount invested in the zero-coupon debt security can vary dynamically over time depending on a predetermined view.
Can you give an example of how this might work? I was thinking perhaps that it could be lifestyling, so that a larger amount of capital is protected as the product approaches maturity? If this is the right idea, are there any other examples of this?
It then goes on to say:
In others, the capital protection may in itself be dependent on the performance of the underlying assets.
Can you give an example of this?
Later in the chapter it says that there may be Accounting benefits - It may be structured so as to avoid income statement volatility from the u/l derivatives. How could this be achieved?
Thank you
Last edited: Sep 17, 2023
