BUSINESS CASE

GRAPHICAL REPRESENTATION 1
You work in an investment bank. Your area of expertise includes derivatives and equity structured products
(equities, indices).
Your manager describes the payoff of a Bullet product indexed to the Vinci share and maturing in 1 year that he considers
interesting. We note P the performance of the underlying asset: P = final level/initial level.
• If the Final Level of the Vinci Share is greater than 160% of its Initial Level, the Investor receives 90% of his capital.
• Otherwise, if the Final Level of the Vinci Share is greater than 80% of its Initial Level, the Investor receives 100% of his capital
plus: max ( 10% ; min( 40%; 2 x P - 200% ))
• Otherwise, if the final level of the Vinci share is higher than 60% of its initial level, the investor receives 100% of his capital
• Otherwise, if the final level of the Vinci share is less than 60% of its initial level, the investor receives the performance P (as a
percentage of the capital invested).

Q1. Can you graph the product described below?

Use P for the x-axis and the percentage of maturity for the y-axis.

Q2. In which case(s) is the investor exposed to capital risk?

Q3. What is the maximum payoff of the product?

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