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Structured Products
Structured products are financial instruments that have payoff structures that are defined in advance. For example: principal protected note - a type of structured product - defines its payoff as either 0% (principal protected) or max X%, depending on the return of an underlying asset - SOL, for example.
In order to have predefined payoffs, structured products typically embed spot assets such as equity or indices, derivatives such as options or forwards, and fixed income instruments such as bonds or notes. By combining these assets together, structured products offer investors the following benefits:
  1. 1.
    Reduce risk: investors know in advance their max and min return.
  2. 2.
    Simplicity: once purchased, investor do not have to manage their structured product position. The derivatives and spot assets are "packaged" together with predefined terms.
  3. 3.
    Flexible: different structured products can cater to specific investor risk and return goals. In traditional finance, investment banks and private wealth offices create custom structured products for their clients to meet their investment objectives.
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