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Template:How Equity Notional Reset works (view source)
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====How {{eqderivprov|Equity Notional Reset}} works==== | |||
''Strap yourselves in, kids!'' | |||
A beginner's guide to the complex and tortuous world of what happens when your {{eqderivprov|Equity Notional Amount}} is subject to {{eqderivprov|Equity Notional Reset}}. | |||
The short version's really quite easy. On any equity reset date, you pay the difference between the prevailing {{eqderivprov|Initial Price}} (being the {{eqderivprov|Equity Notional Amount}} as it before the reset date) and the present market value of the stock on the reset date (the {{eqderivprov|Final Price}}). You then adjust the Equity Notional Amount to be equal to that Final Price. When the next reset date rolls around, that becomes the Initial Price and you do it all over again. | The short version's really quite easy. On any equity reset date, you pay the difference between the prevailing {{eqderivprov|Initial Price}} (being the {{eqderivprov|Equity Notional Amount}} as it before the reset date) and the present market value of the stock on the reset date (the {{eqderivprov|Final Price}}). You then adjust the Equity Notional Amount to be equal to that Final Price. When the next reset date rolls around, that becomes the Initial Price and you do it all over again. | ||