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Investor considers the equity market too risky for a direct investment, but is comfortable with the added protection of a principal protected note.
Example Investor puts 10 Million Baht in 6-month principal protected note linked to preference stock with a 30 % participation rate
| A quotation will look like this |
|
Equity
(investor preference) |
BBL |
Tenor
(investor preference) |
6 Months |
| Protection level |
100% |
| Strike |
100 Baht |
| Value date |
27 Dec 05 |
| Settlement |
29 Dec 05 |
| Fixing |
23 Jun 06 |
| Maturity |
29 Jun 06 |
Participation rate
(investor preference) |
30 % |
| Minimum size |
10 Million Baht |
Scenario 1
If BBL price is up 20%
at 23 Jun 06;
At 29 Jun 06, the investor receives
his 10 Million Baht principal back plus 30% of the
stock price appreciation, equal to 6% (20% * 30%)
Scenario 2
If BBL price is down 20%
at 23 Jun 06;
At 29 Jun 06, because the stock price has declined, the
investor receives his/ her 10 Million Baht back.
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