Trade of the month: Bonus structure
The bonus structure, used extensively in Europe and emerging in the US, puts capital at risk and includes a minimum payment (or bonus) paid provided a fixed barrier (American or European) set below the initial underlying is not hit. The barrier can be American or European style. If the underlying performance is strong and the payout calculation exceeds the bonus amount, then this is the value of the product. If the barrier is hit, the product will pay the underlying payout formula but without a
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