even if Novartis shares were to fall below CHF 60. •Simultaneously, you’d participate in the price gains of Novartis, albeit only at a rate of 50 percent. •So if the shares were to be priced at CHF 66 on the maturity date (i.e. a 10 percent gain), you’d earn a 5 percent return on your investment by receiving a repayment of CHF 105.
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A capital-guaranteed structured product example •A capital-guaranteed structured product will be obtained by combining: Cost of equity option Issue Date Issue Price of zero-coupon bond Notional Par Value Maturity Date Maturity Price of zero-coupon bond (known at time of issue) Zero-coupon bond Equity option value at maturity Equity Option
Yield enhanced•These products offer no protection for the initial investment and sometimes with a capped upside potential. The aim is to generate a return higher than that of other investment options generally considered less risky such as a bond. •Although yield enhanced instruments may appear bond-like, paying a coupon and often issued at par or at discount, their risk profile is very different to that of classical fixed income instruments. •It is important to understand that these coupon paying instruments are not directly comparable to bonds. •Yield enhanced products can have features such as a barrier or multiple barriers, fixed or relative to a predetermined factor, causing certain features to take effect if specific conditions are met during the investment period. •A barrier causes a certain feature of an instrument to come into effect once a predetermined condition is met. This could be based on the price movement of the underlying asset.