A note that promises your money back plus 70% of the gain can still trail a plain deposit. This lesson takes one apart: the safe piece, the option inside, what the bank keeps, and how to build the same thing yourself.
After this lesson you can
- Split a structured note into a safe piece and an option
- Work out what the bank keeps from a note's terms
- Compare a note against a plain deposit, not against the index
- Explain what a cap and a high rate cost you
- Spot the two quieter risks and build a note yourself, and avoid the five mistakes
Chapters
- 0:00Your money back, plus 70%
- 0:58Two pieces inside
- 2:03What the 70% costs
- 2:57The race against a deposit
- 3:59What sets the terms
- 5:04Trading away the top
- 6:02A high rate, with a catch
- 7:15Two quieter risks
- 8:08Building it yourself
- 9:15Five mistakes
- 9:54The whole lesson on one screen