High Risk Clients or Industries in Regards to PEP's

989 WordsJan 15, 20184 Pages
Please answer to the following question. Please use as mandatory the attached material as source and the website mentioned below. Please write around 160 words for question 1) Who are High risk clients/industries; in regards to PEP's? High-risk clients who are willing to take the risk of the "derivatives", "callable range accruals", "soft knock in knock out forwards", "reverse convertible with floor" and "alpha returns that are robust in bull, bear and flat markets" and other such packets devised by banks and financial institutions. The objective of these packets is to lure in investors. The high risk clients were also those willing to procure the following: Interest rate linked notes where floating interest rates could be exchanged for fixed interest rates and vice versa. Equity linked notes - where investors could capitalize the price movement of underlying stocks. Foreign exchange and commodity linked notes -where investors could capitalize on the fluctuating cost of underlying currencies or commodities (e.g. gold, silver, sugar and oil). Hybrid linked notes -where the investor could combine a number of instruments. Credit linked notes 2) Who do PEPs pose a threat to? Structured packages can be used ethically and in a helpful way, but they can also be misused contributing to financial meltdowns when they fall in the wrong hands. All these packets pose a threat to low-risk small business investors - retail customers - who are ignorant of the underlying risks

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