A capital protected product/ instrument that pays back the protected amount at the end of its term. It is a fixed interest bond that repays its principal amount at its maturity date. It allows the holder to receive a stream of interest payments while protecting the initial investment. However, it would be possible that a significant portion of the investment is lost if the holder prematurely exits- i.e., cash in before the bond term ends.
With a capital-protected bond, the issuer guarantees the investor (the holder) repayment of the amount of the bond’s nominal value at maturity (unless if the issuer ends up in default). The bond provides an opportunity of a specific level of return depending on the performance of one underlying or more.
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