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Question 32/49
What is a structured product?
Correct Answer: B
Astructured productis a pre-packaged investment strategy often involving derivatives and fixed-income securities to offer a combination of protection and growth potential.
* Principal-Protected Note (PPN):A PPN is a common type of structured product that guarantees the return of the original investment (principal) at maturity while offering potential upside linked to the performance of an underlying asset or index.
* Why Other Options Are Incorrect:
* A. A mortgage loan: This is a form of debt, not a structured product.
* C. An equity index: An index tracks the performance of a market but is not a structured product itself.
* D. A credit card receivable: This is a financial asset used in securitization, not a structured product.
References:
* CSC Volume 2, Chapter 23: Structured products and their features.
* Principal-Protected Note (PPN):A PPN is a common type of structured product that guarantees the return of the original investment (principal) at maturity while offering potential upside linked to the performance of an underlying asset or index.
* Why Other Options Are Incorrect:
* A. A mortgage loan: This is a form of debt, not a structured product.
* C. An equity index: An index tracks the performance of a market but is not a structured product itself.
* D. A credit card receivable: This is a financial asset used in securitization, not a structured product.
References:
* CSC Volume 2, Chapter 23: Structured products and their features.
- Question List (49q)
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- Question 30: When considering management accounts, what is most accurate ...
- Question 31: How do the fees differ between an F-class and front-end vers...
- Question 32: What is a structured product?
- Question 33: What do technical analysis and fundamental analysis have in ...
- Question 34: What do the returns on treasury bills often represent?...
- Question 35: What type of risk were mortgage-backed securities designed t...
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- Question 48: Which type of sell side equity revenue is earned when a deal...
- Question 49: Why would a corporation choose to issue preferred shares rat...
