Risk To Consider
- The price of the reference shares may decline during the term of the note, which will affect the investor negatively, while the investor does not have the same price appreciation potential as the reference shares, because at maturity the most the investor will receive is his original principal amount.
- Investors selling notes prior to maturity may receive a market price which may be higher or lower than par value, not necessarily reflecting any increase or decrease in the market price of the underlying equity.
- Reverse convertibles do not guarantee return of principal at maturity.
- The market price of the Reverse convertibles may be influenced by unpredictable market factors.
Read more about this topic: Reverse Convertible Securities
Famous quotes containing the word risk:
“Nature, we are starting to realize, is every bit as important as nurture. Genetic influences, brain chemistry, and neurological development contribute strongly to who we are as children and what we become as adults. For example, tendencies to excessive worrying or timidity, leadership qualities, risk taking, obedience to authority, all appear to have a constitutional aspect.”
—Stanley Turecki (20th century)