The supplemental prospectus of an actual offering by Royal Bank of Canada states the following: Reference Asset:
Question:
The supplemental prospectus of an actual offering by Royal Bank of Canada states the following:
“Reference Asset: | SGI Smart Market Neutral Commodity Index (USD – Excess Return) (BloombergTicker: SGICVMX). For a description of the Reference Asset, please see thesection below, “The Reference Asset.” |
Specified Currency: | U.S. Dollars |
Minimum Investment: | $1,000 |
Denomination: | $1,000 |
Pricing Date: | January 26, 2010 |
Issue Date: | January 29, 2010 |
CUSIP: | 78008HTY6 |
Interest Payable: | None |
Payment at Maturity (if held to maturity): | The Payment at Maturity will be calculated as follows: |
1. If the Reference Asset Performance is greater than 0%, then youwill receive an amount equal to: Principal Amount + [(Principal Amount × Reference Asset Performance)] ×Participation Rate 2. If the Reference Asset Performance is less than or equal to 0%, thenyou will receive an amount equal the principal amount of your notes. | |
Reference AssetPerformance: | The Reference Asset Performance, expressed as a percentage and roundedto fourdecimal places, will be calculated using the following formula: |
Final Level – Initial Level Initial Level | |
Participation Rate: | 100% |
Initial Level: | 109.0694 |
Term: | Approximately five (5) years |
(a) What type of structured note is this?
(b) What are the risks associated with investing in this structured note?
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
a This is a commoditylinked note The payments of a commoditylinked note are tied to the price performance of a designated commodity such as crude oil ...View the full answer
