Investment Certificates
Investment certificates are investment instruments that
are similar in form to debenture bonds. They are a special
type of debenture bond that the investor purchases from the
issuer and then sells back to the issuer at a later time. In
other words, the issuer is obligated to buy back the
investment certificates.
The price of an investment certificate is defined by a so-called specialist (usually the issuer) based on the
development of the underlying asset’s price. Examples of
underlying assets include Exchange indexes, shares,
currencies, mineral raw materials, etc. The issuers are
usually large international financial institutions.
Non-leverage certificates
The construction of these types of certificates is very
simple and is based on the fact that their price copies the
price of the background asset, meaning that if the price of
the background asset increases by 1%, the price of the
investment certificate also increases by 1%.
Leverage certificates
The profits or losses of these certificates are
multiplied by a leverage coefficient. Another important
piece of data that the issuer can identify in the issue
conditions is the so-called knock-out price. This price is
important for investors, because if it is exceeded the
certificate loses its value and is no longer traded at the
Exchange. Investing in knock-out certificates is riskier
than other types of investing.
Investment certificates may be used for the following
types of transactions:
Detailed information: