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Template:How Equity Notional Reset works: Difference between revisions
Template:How Equity Notional Reset works (view source)
Revision as of 11:01, 15 December 2015
, 15 December 2015→How {{eqderivprov|Equity Notional Reset}} works
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*If {{eqderivprov|Equity Notional Reset}} ({{eqderivprov|5.10}}) applies, then on each Cash Settlement Payment Date you have to adjust the Equity Notional Amount by the Equity Amount. | *If {{eqderivprov|Equity Notional Reset}} ({{eqderivprov|5.10}}) applies, then on each Cash Settlement Payment Date you have to adjust the Equity Notional Amount by the Equity Amount. | ||
*The {{eqderivprov|Equity Amount}} ({{eqderivprov|8.7}}) equals the {{eqderivprov|Equity Notional Amount}} times the {{eqderivprov|Rate of Return}}. | *The {{eqderivprov|Equity Amount}} ({{eqderivprov|8.7}}) equals the {{eqderivprov|Equity Notional Amount}} times the {{eqderivprov|Rate of Return}}. | ||
*The {{eqderivprov|Rate of Return}} ({{eqderivprov|5.7}}) is (({{eqderivprov|Final Price}} - {{eqderivprov|Initial Price}})/{{eqderivprov|Initial Price}}) * any{{eqderivprov|Multiplier}} | *The {{eqderivprov|Rate of Return}} ({{eqderivprov|5.7}}) is (({{eqderivprov|Final Price}} - {{eqderivprov|Initial Price}})/{{eqderivprov|Initial Price}}) * any {{eqderivprov|Multiplier}} | ||
*The {{eqderivprov|Final Price}} is the market value of the {{eqderivprov|Share}} on the {{eqderivprov|Valuation Date}} | *The {{eqderivprov|Final Price}} is the market value of the {{eqderivprov|Share}} on the {{eqderivprov|Valuation Date}} | ||
*{{eqderivprov|Initial Price}} is the price specified in the confirm (as adjusted by this glorious mechanic). | *{{eqderivprov|Initial Price}} is the price specified in the confirm (as adjusted by this glorious mechanic). | ||
You pay out the equity amount, and adjust the notional accordingly. It's like converting a collateral amount into an absolute obligation by restriking. | You pay out the equity amount, and adjust the notional accordingly. It's like converting a collateral amount into an absolute obligation by restriking. | ||