L13 Introduction to financial products.pptx - FINA 1121 Financial Markets Products Course Leader Dr Nadia Benbouzid AOF/IIFE Lecturer Dr Thuong Nguyen

L13 Introduction to financial products.pptx - FINA 1121...

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1 FINA 1121: Financial Markets & Products Course Leader: Dr. Nadia Benbouzid AOF/IIFE Lecturer: Dr. Thuong Nguyen L e c t u r e 1 3 I n t r o d u c t i o n t o F i n a n c i a l P r o d u c t s
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Master of Science in Finance & Investment , Joint Program between University of Greenwich and Academy of Finance (Institute of International Finance Education), Hanoi Campus Definition of Structured Products? LSE (London Stock Exchange): Structured products are simply financial instruments issued by banks with varying terms, pay-outs and risk profiles tracking the performance of an underlying asset which can be equity, index, commodity, currency or a basket. There are no standardised structured products, the terms, pay-out and risk profile of each instrument is bespoke and determined at the time of issue by the issuing bank. It is therefore important for investors to understand what a particular product will do and how it will behave if certain conditions are met, before investing. FCA (Financial Conduct Authority): Structured products are generally a type of fixed-term investment where the amount you earn depends on the performance of a specific market (such as the FTSE 100) or specific assets (such as shares in individual companies). 2
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Master of Science in Finance & Investment , Joint Program between University of Greenwich and Academy of Finance (Institute of International Finance Education), Hanoi Campus Main Families of Structured Investment Products: 3
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Master of Science in Finance & Investment , Joint Program between University of Greenwich and Academy of Finance (Institute of International Finance Education), Hanoi Campus Types of Structured Products: Structuring investment products with derivatives allows the tailoring of products to different investor market views. Based on the underlying assets: Credit products Equity Products Interest rate products Others. 4
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Master of Science in Finance & Investment , Joint Program between University of Greenwich and Academy of Finance (Institute of International Finance Education), Hanoi Campus Structured Credit Products: For investors who are willing to take corporate or sovereign credit risk in an attempt to boost income or in some cases provide capital gain. Appeal to institutional, HNW (High Net Worth) and increasingly to retail investors. Capital protected products are also common when underlying assets are more risky. These include: Corporate Credit Default Swaps (CDS), Sovereign CDS…etc 5
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Master of Science in Finance & Investment , Joint Program between University of Greenwich and Academy of Finance (Institute of International Finance Education), Hanoi Campus Interest-rate products: Interest-rate products include all those whose income and valuation depends on an interest-rate that fluctuate depending from market rates.
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