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Ravel The Veil - The Truth of Accumulator




www.bmi-appraisals.com


   

10/2008


   


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The media recently reported that a company entering into several foreign currency accumulator contracts had a predicted huge loss of more than HK$15 billion.

From the above example, we can see that the loss due to accumulators can be devastating when the spot price of the underlying asset plunges below the strike price. On the other hand, the upside on accumulators is capped as the contract will be terminated once the spot price of the underlying asset hits the knock-out price, which is about 10% above the spot price of the issue date.

Investors are advised to be aware of all aspects and risks associated with accumulators before making the investment decision. For more details of assessing accumulators, please contact our Dr. Tony Cheng at (852) 2593 9633 or email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 




 
               

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