Capital guarantee
Encyclopedia
A capital guarantee product means that when an investor
buys, or "enters", this specific derivative security he is guaranteed to get back at maturity
a part or the totality of the money he invested on day one. Examples of capital guarantees include bond plus option
, usually bond plus call, and constant proportion portfolio insurance
.
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
buys, or "enters", this specific derivative security he is guaranteed to get back at maturity
Maturity (finance)
In finance, maturity or maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal is due to be paid....
a part or the totality of the money he invested on day one. Examples of capital guarantees include bond plus option
Bond plus option
In finance, a Bond+Option is a capital guarantee product that provides an investor with a fixed, predetermined participation to an option. Buying the zero-coupon bond ensures the guarantee of the capital, and the remaining proceeds are used to buy an option.----As an example, we can consider a...
, usually bond plus call, and constant proportion portfolio insurance
Constant proportion portfolio insurance
Constant proportion portfolio insurance is a capital guarantee derivative security that embeds a dynamic trading strategy in order to provide participation to the performance of a certain underlying asset. See also dynamic asset allocation...
.