Exercise
Answer the following questions.
1. True or false. Structured products are often highly confusing and difficult for the average retail investor to understand.
2. True or false. Because of their principal protection feature, structured products are suitable for investors who may need their funds in the near future (e.g., to buy a house).
3. _____ are long-term notes that track the performance of an index and offer principal protection.
4. Which of the following is not true about structured notes with principal protection?
A. The amount of principal protection varies widely among structured products.
B. They usually track an index, so if the index returns 30%, the structured note is likely to return 30%.
C. Structured notes are unsecured debt, so the principal protection is only as good the creditworthiness of the issuer.
D. For investors who wish to trade their structured notes, there may be no secondary market.
Answers
1. True. Because str