By Charlotte Banks
Wednesday June 16, 2010 at 12:15
The standard option will give investors a fixed return of 47.5 per cent plus full repayment of capital at maturity providing that the FTSE 100 does not fall below 60 per cent of its strike level during the term. Should this happen, both the return and investors’ capital would be lost 1:1 with the index.
The new Reserve option
will return 40 per cent plus investors’ capital in full at maturity providing that the Index does not drop below 60 per cent of its strike level during the term.
Should the FTSE 100 drop below this barrier level, neither the return nor capital is immediately at risk because of the reserve feature.
With the Reserve the 60 per cent barrier is observed at set points each month, and should the FTSE 100 breach the barrier on any of these observations, the equivalent percentage will be exhausted from the Reserve.