Benefits of PARs
- Enhanced/Leveraged Return
- Upside: Receive a return that is enhanced by leverage so that it will be higher than the actually return, subject to any caps.
- Downside: Losses are not magnified by the leveraged component, and some downside protection may be offered however is the reference asset is off significantly the investor will be subject to loss of principal.
- No requirement for Option Approved accounts.Replication of this strategy would require the use of options. While investors do not need to be option approved they should have a fundamental understanding of option strategies.
- One transaction as opposed to many.Replication of this strategy would require a number of transactions to leverage the upside exposure to the underlying asset. An investment in these notes is a single transaction.
Read more about this topic: Principal At Risk Notes
Famous quotes containing the words benefits of and/or benefits:
“Unfortunately, we cannot rely solely on employers seeing that it is in their self-interest to change the workplace. Since the benefits of family-friendly policies are long-term, they may not be immediately visible or quantifiable; companies tend to look for success in the bottom line. On a deeper level, we are asking those in power to change the rules by which they themselves succeeded and with which they identify.”
—Anne C. Weisberg (20th century)
“When your parents are in political life, you aren’t normal. Everybody talks about the benefits, but I don’t know what the benefits are.... But I’d rather have that kind of mother than an overweight housewife.”
—Katherine Berman Mariano (b. 1957)