Structured Investments Glossary
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Absolute Return Barrier:
A type of structured note or CD that may pay interest equal to the absolute value of the appreciation or depreciation of an underlying Index. Interest is paid at maturity only if the Index levels do not breach predetermined barriers, or levels, during the observation period.
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Alpha:
Structured notes can be indexed to a wide range of fund-linked assets, such as mutual funds and hedge funds. Alpha reflects the difference between a fund's actual performance and its expected performance (its benchmark). A positive alpha indicates that the fund has performed better than expected, given its level of risk relative to the market. Conversely, a negative alpha indicates the fund has underperformed relative to its benchmark.
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American-Style Option:
American-style options are options that can be exercised at any time.
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Asian Options:
Asian options are options that use averaging in determining either the strike price or the final settlements price.
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Asset Allocation:
A note or CD that pays at maturity the best performer of 3 underlying portfolios. Each portfolio contains different weightings of commodities, bonds, equities and currencies.
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At-the-Money:
An option whose strike is set at the same level as the prevailing market price.
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Averaging:
Many structured notes measure either the starting index level or the final index level(or both) using averaging. This means that the index levels used in the calculation of the products's final return are the average index levels calculated during some pre-specified period.
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The terms and definitions contained in the Structured Investments Glossary were developed by Incapital LLC. These definitions may differ from securities industry-related definitions for common terms. The definitions contained herein should be utilized with respect to the terms used on the Incapital.com website.