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system
what are the pros and cons of structured deposits?
user
say we are in 'normal times.' passbook rates are 5% or so. longer rates, 6-7%. i offer you a product with these terms, for $10,000 i will return a "guaranteed" $10,000 in 6 years and based on the stock market, 1% for every 2% the s&p is up beyond 10% at maturity. as the seller of this product, i take $6666, and buy a fixed investment, 6 years at 7% in treasuries will return the $10000. really. i then take the $3334 and buy out of the money calls on the s&p each year to capture the gains, if any, and to deliver on my promise.  this is one example of a structured deposit offering. they can have nearly any terms one can imagine. tied to any product. s&p, crude oil, gold. whatever.
assistant