Discount Certificates

Inhaltsangabe:Introduction:In 1985 Thomas Zwirner of HSBC Trinkaus invented the Discount Certificate by copying an investment strategy of professional investors.Now there are over 100,000 certificates traded on the European Warrant Exchange (EUWAX). About 80% are discount certificates. Many Banks promote discount certificates as a safer and more profitable investment than a direct investment in stocks. However, when Lehman Brothers has filed bankruptcy in 2008 many investors lost their money invested in Lehman certificates. Investors may now ask themselves the question if certificates and especially discount certificates are a true alternative to a stock investment.The following work will answer this question. It is structured as follows: Chapter 2 describes basic information about discount certificates; it also provides information on the markets for discount certificates. Chapter 3 will identify and evaluate the risks and opportunities of a direct stock investment and a investment in discount certifi-cates. Chapter 4 evaluates the behavior of discount certificates and stocks in differ-ent market scenarios by using a fictive example.In chapter 5 possible strategies for an investment in discount certificates are given by the author and evaluated on their risk and opportunities, while chapter 6 concludes.Since there are many different types of discount certificates, this work will focus on the discount certificates with an underlying of one share of the respective company.Inhaltsverzeichnis:Table of Contents:Executive Summary1Table of Contents2List of Abbreviations4List of Figures4List of Tables41.Introduction52.The Discount Certificate62.1Definition and General Information62.2Markets for Discount Certificates73.Differentiation of Discount Certificates and stocks93.1Opportunities and risks93.2Evaluation124.Behavior of Discount Certificates in Different Market Scenarios134.1Assumptions134.2Five Market Scenarios144.2.1The Growth Scenario144.2.2The Moderate Growth Scenarios164.2.3The Stagnation Scenario184.2.4The Moderate Decline Scenarios204.2.5The Decline Scenario224.3Special considerations when investing in discountcertificates244.4Evaluation and Critical Review255.Strategies for investing into Discount Certificates275.1Classic Strategies275.2Unconventional Strategies285.2.1The short maturity strategy295.2.2The low volatility strategy316.Conclusion32Reference List33Textprobe:Text […]