Capital Protection with Twin-Win
A twin-win certificate is a type of structured product, investing in which there is a chance to earn income not only when the price of the underlying instrument increases, but also when it somehow decreases, provided that these fluctuations in the price of the underlying asset occur within the barriers specified in the prospectus.
- Twin Win: investors can generate income from the underlying asset if no price barriers set by the prospectus are breached;
- Capital protection: return of funds invested in the certificate upon repayment.
The terms and conditions for return of the invested funds by the investor may be the following ones:
“Should the underlying asset as of the certificate maturity date fix on the price of 115 % of the initial level or higher, the instrument redemption price for the investor shall be 115 %; however, should the underlying asset as of the maturity date be in the price range of 70 % of the initial level or higher, then the instrument redemption price for the investor shall be 100 % + ABS (Underlying Final Price/ Underlying Initial Price – 1); should the underlying asset fall below 70 % of the initial price, redemption payment for the investor shall be calculated using the following formula: Underlying Final Price / Underlying Initial Price.“
Thus, in this example, it may become possible that the investor will lose even the invested funds when the underlying asset crosses the lower price barrier. However, it is worth noting that the terms and conditions of the prospectus of this type of structured products often guarantee a full refund regardless of the crossing of the established lower barrier.
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