Structured notes are debt securities that combine derivatives and bond components, designed for investors with low risk appetite to access higher returns. They have a fixed maturity period, typically do not allow early redemption, and come with risks including principal loss and high default likelihood. While primarily for institutional and high-net-worth investors, ordinary investors can also invest, provided certain market conditions are fulfilled.

1. By:-
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https://efinancemanagement.com/sources-of-finance/structured-notes
Structured Notes

2. 1. Meaning
2. How do these Works?
3. Types
4. Advantages & Disadvantages
5. Reference
Content

3. Structured notes are securities having a combination of derivatives and bond components, tailored to help investors with
little risk appetite to invest in high to medium risk assets.
These notes are in the form of debt, and coupon payments are made to the investors over the period of their investment.
Structured notes perform on the basis of the performance of their underlying/linked assets.
Meaning

4. Structured notes are issued for a particular time frame and have a fixed maturity period. Early redemptions are generally
not permissible and may carry heavy costs with them. Also, usually, there is no guarantee for the safety of the principal
amount. Hence, it is the call of the investor to invest in it or not.
Because of their high risk-high return nature and involvement of a large sum of money, earlier only institutional investors
and high net-worth individuals used to invest in structured notes. However, now ordinary investors looking for better
than the standard or normal return also have an opportunity to earn high returns, if certain market conditions are met.
How do these Work?

5. 1. Equity-linked notes
2. On the basis of credit risk
3. On the basis of currencies
4. On the basis of interest rates
5. On the basis of commodity rates
Types

6. Advantages:
• Have a diversified investment portfolio
• These may have a “protection clause” that can limit the losses of an investor.
Disadvantages:
• Difficult to comprehend
• Risk of losses
• Liquidity problem
• High default risk
Advantages & Disadvantages

7. Reference
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