It is to be acknowledged that a derivative contract is a deferred delivery deal where the value depends on certain underlying properties, or is derived from them. The proprietor of a derivative arrangement does not own the underlying assets.

Please note that derivatives are important hedging tools for producers and buyers of commodities. For example, oil producers and airlines (aircraft absorbs jet fuel) may use futures and forward contracts respectively to ensure their revenue and expenses stability.

It is stated that the speculators also use derivative contracts as directional bets of the underlying price change. For example , if an investor anticipates that a certain stock’s price will go up over a certain time period, rather than direct investment in that stock, he may purchase an option on that stock.

Please learn that the spot-to-forward price differential is often referred to as the premium or discount. That is, when it is positive, the cost of carry is referred to as a premium; is referred to as a discount if it is negative.

Please note that before making an investment decision an investor should have sufficient information and be kept up-to-date on the performance of his investments. Communication with consumers is continuous, divided into the product life cycle into three stages:
· Divulgation at the point of sale;
· Disclosure at the start of the policy; and
· Continued transparency after the start of the program.

It is to be accepted that only liquid investments are permitted under a retail CIS and those subject to correct and verifiable standard valuation. It includes shares, debt, deposits, money market instruments, and financial derivatives. A CIS seller is not required to invest in another hedge fund or a mutual fund.

Please note that the investors too are attracted by high-potential return products. Nevertheless, a structured product only returns investors if: (A) correctly expected market view; (B) acceptable market view strategy or structure; and (C) pricing on a program is fair. The products involved are among the most volatile of the three, because they they provide no downside security at all; all the investments are placed into performance pursuance.

Please note that investors have three basic investment goals, namely principal protection, investment income stability and capital appreciation potential. Therefore, if need arises, investor wants to be able to turn his investments into cash atreasonable price. Although liquidity is not directly linked to return on investment, it is nevertheless an significant factor, and fair expectations.Please note that investors have three basic investment goals, namely principal protection, investment income stability and capital appreciation potential. Therefore, if need arises, investor wants to be able to turn his investments into cash atreasonable price. Although liquidity is not directly linked to return on investment, it is nevertheless an significant factor, and fair expectations.

It is to be acknowledged that advisors can assist clients in assessing their investment targets based on their personal circumstances and risk appetites. The pool of organized goods is large enough to suit most health, revenue, and growth targets combinations. Many structured goods are not liquid, however, and the “fair” value of the mark is difficult to evaluate.

It is to be acknowledged that structured goods are highly complex. The degree to which the consumers understand the goods depends on their investment knowledge and financial literacy level. Clients have trouble, without previous experience with derivatives.

It is to be acknowledged that a security’s market price is the prevailing price the security will purchase or sell at. The stock price is, in principle, the current value of potential earnings for the lender. Profitability-related factors-existing and future-impact the current market price. In reality, supply and demand are, to a large degree, dictated by market price.

It is stated that there is no such thing as a financial investment outside the economy. The general economic conditions and the business outlook influence them. Because of today’s global globalization, consumer prices are influenced not only by domestic factors but also by the global climate.

Please note that though general market risks affect all the securities’ values, there is risk f actors can only affect the price of the protection of a specific issuer. An obvious example is a downgrade in a company’s credit rating, which creates downward pressure on its share and bond prices. This in effect allows certain derivative contracts to lose value, depending on the stock or bonds of that firm.

Please learn that investor liquidity refers to the ease with which to turn its assets into cash. Publicly traded goods appear to have greater liquidity over OTC traded products, as the market is primed. However, it does not guarantee liquidity only because a commodity is listed on an exchange, as the buyer may not be able to sell his investments at a fair price due to lack of demand.

Please note that a derivative contract is a deferred delivery deal where its value depends on, or is derived from, other underlying property. A derivative contract holder doesn’t own the assets that underlie it. Use home buying as an example is a derivative contract as an option to purchase a flat. You pay for the right to buy the flat a fraction of the price of the flat, You will not own the apartment though until years later when you pay the purchase balance.

For an upside result, there is a trade-off between principal protection and participation. The degree of protection in return for greater involvement in results may be reduced. For example, a product can be designed to provide a return of 75 percent of the principal, by reducing investment in the instrument of fixed income by 25 percent, allowing for greater investment in derivatives, and therefore a greater upside potential. The drug also provides defense against risk, but not 100 percent of the principal.

It must be recognized that a commodity swap is a transaction where one collection of payments is determined by the price of a commodity or the price of a commodity indice. Plain vanilla OTC transactions for a fixed-for-floating risk exchange, in which no physical commodity is offered, are the most common examples of commodity swaps.

Please note that like all other structured products, an unsecured debt instrument is an inverse convertible bond. It is issued as a note to which a single stock is associated. In normal circumstances it has characteristics of a fixed income instrument: annual interest payments (if the bond so provides), and payment of the note’s par value upon maturity.

It is to be acknowledged that all reverse convertible bonds and discount certificates offer capped upside opportunities with no insurance against downside. They share the same risk-return profiles, though very different in structure. Discount certificates are structured by combining options of two different types.

Please note that the products for enhancing yields (generally) do not provide defense against downside. The risk exposure of the investor matches precisely that of the underlying stock if the stock price falls below kick-in point. Investors considering such items should consider the downside risk of the underlying stock and be comfortable with it.

Please know that the risk is of confusion in the finance realm. If an investment is called high risk, it means that the chance of the anticipated return that may not be obtained is greater than other investments. It also means a weakening of the principal in full or in part. Investors are obviously looking for equal rewards for the risk they take on.

It is stated that the barrier alternative is considered to be included in the Barrier Certificates. In this choice, the exercise option depends on the attainment or attainment of the underlying assets at a given barrier. Up-and-out: The spot price starts below the barrier level and for the knock-out option (i.e. it is null and void) has to move up to the barrier point.

It is stated that structured notes and the structured funds may be listed. A number of structured notes are listed on the Singapore Exchange (SGX) under the categories Exchange-Traded Notes (ETNs) and Certificates. Structured listed funds come under the umbrella of common Exchange-Traded Funds (ETFs). Bear in mind that not all ETF’s are structured funds.

Please learn that the goods listed in Singapore shall be subject to inspection by SGX. When deciding the eligibility for a list of structured goods, SGX considers the integrity of financial institutions issuing securities, their financial capacity, and the liquidity of the proposed listed securities. When order to ensure liquidity, SGX needs at least 75 percent of the securities to be allocated to at least 100 investors in the event of an ETN certificates.

It must be understood that a CIS is a pooled investment mechanism in which individual investors invest in a mutual fund, and a qualified investment manager manages the assets of the fund and the day-to-day operations. A Standardized Fund is a CIS and must comply with the CIS regulatory requirements , especially the CIS Code (the “Code”) provided by the MAS.

It is claimed that the properties of a CIS are held at third-party custodian such as a trustee. While investors in structured funds do not have to worry about the credit risk of the product-issuer, although they are also subject to CIS investment credit risk. By way of comparison, investors in structured deposits of structured bonds are general lenders of financial institutions that issue good bonds in the event of bankruptcy.

Please notice that Financial Item classification is not universal. Traditional investments such as CIS and ILPs can be categorized in a variety of ways: by regional orientation; by asset class; by maturity; etc. Structured securities can also be classified in different ways, e.g. through underlying asset classes; through risk-return profiles; or through investment goals.

It is stated that for the principal component a zero-coupon bond is typically used. The underlying aspect is most commonly a single stock, a stock basket, or an index. Some examples of these products include structured deposits; equity or credit-linked notes to the degree that the product’s fixed income portion is designed to yield capital returns; and guaranteed capital funds. However, protection against disadvantages is only as good as the creditworthiness of the protective party.

It must be remembered that Financial Goods are not uniformly graded. Traditional investments such as CIS and ILPs can be categorized in different ways: by geographical focus; by asset class; by maturity; etc. Structured products may also be classified differently, e.g. through underlying asset classes; through risk-return profiles; or through investment targets.