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 Illustrative Examples |
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Base Currency:USD |
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Investment Amount :USD100,000 |
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Guaranteed Investment Amount %:100% |
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Guaranteed Investment Amount: Investment Amount x Guaranteed Investment Amount Percentage = USD 100,000 x 100% = USD 100,000 |
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Investment Period: 18 months |
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Start Date:6 September 2006 |
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Maturity Date:18 March 2008 |
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Stock Basket: Stock A,Stock B,Stock C,Stock D (all stocks are listed on main foreign stock exchanges. In this example, the stocks are assumed to be listed on The Hong Kong Stock Exchange)
| Underlying Stock |
Stock A |
Stock B |
Stock C |
Stock D |
| Initial Stock Price |
HKD 70 |
HKD 120 |
HKD 100 |
HKD 95 |
| Early Maturity Trigger Stock Price (105% of the Initial Stock Price) |
HKD 73.5 |
HKD 126 |
HKD 105 |
HKD 99.75 |
| Return Accrual Trigger Stock Price (95% of the Initial Stock Price) |
HKD 66.5 |
HKD 114 |
HKD 95 |
HKD 90.25 |
“Stock Performance” in respect of a Stock in the stock basket, is calculated by the following formula:
| The Stock Performance on a Scheduled Trading Day during an Observation Period |
Closing Stock Price on the relevant day - Initial Stock Price |
x
100% |
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Initial Stock Price |
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| In respect of a Scheduled Trading Day, the Worst Performing Stock will be the stock with the lowest Stock Performance on such day calculated by the formula above |
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The Observation Periods, Early Maturity Observation Dates, Early Maturity Dates and Investment Return Payment Dates as pre-determined by the Bank are as follows: |
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Observation Periods |
Early Maturity Observation Dates |
Early Maturity Dates |
Investment Return Payment Dates |
| 1 |
6 Sept 2006 - 6 Dec 2006 |
6 Dec 2006 |
18 Dec 2006 |
18 Dec 2006 |
| 2 |
7 Dec 2006 - 6 Mar 2007 |
6 Mar 2007 |
16 Mar 2007 |
16 Mar 2007 |
| 3 |
7 Mar 2007 - 6 Jun 2007 |
6 Jun 2007 |
18 Jun 2007 |
18 Jun 2007 |
| 4 |
7 Jun 2007 - 6 Sept 2007 |
6 Sept 2007 |
18 Sept 2007 |
18 Sept 2007 |
| 5 |
7 Sept 2007 - 6 Dec 2007 |
6 Dec 2007 |
18 Dec 2007 |
18 Dec 2007 |
| 6 |
7 Dec 2007 - 6 Mar 2008 |
N.A. |
N.A. |
18 Mar 2008 |
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The Accrued Investment Returns potentially payable in respect of each Observation Period are calculated as follows:
Investment Return = Guaranteed Investment Amount x Investment Return Rate
where, Investment Return Rate = Range Accrual Return Rate x n/N, Range Accrual Return Rate will be pre-determined by the Bank , in this example, it is 2.5% (equivalent to 10% on an annualized basis); n refers to the number of Scheduled Trading Days on each of which the Closing Stock Price of the Worst Performing Stock is greater than its Return Accrual Trigger Stock Price in the relevant Observation Period (referred to herein as “Return Accrual Scheduled Trading Days”, please refer to the Annex for details on the calculation); and N refers to the total number of Scheduled Trading Days in the relevant Observation Period. |
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In this example, the total Redemption Amount payable on the Maturity Date or Early Maturity Date is calculated as follows:
Scenario 1: Early Maturity
Assuming on the 3rd Early Maturity Observation Date (i.e. 6 Jun 2007), the Closing Stock Price of the Worst Performing Stock in the stock basket (i.e. Stock B) equals to its Early Maturity Trigger Stock Price.
| Underlying Stock |
Stock A |
Stock B |
Stock C |
Stock D |
| Initial Stock Price |
HKD 70 |
HKD 120 |
HKD 100 |
HKD 95 |
| Closing Stock Price on the 3rd Early Maturity Observation Date |
HKD 75 |
HKD 126 |
HKD 115 |
HKD 110 |
| Early Maturity Trigger Stock Price(105% of the Initial Stock Price) |
HKD 73.5 |
HKD 126 |
HKD 105 |
HKD 99.75 |
| Stock Performance |
7.14% |
5.00% |
15.00% |
15.79% |
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The CPI Product will mature early on the 3rd Early Maturity Date (i.e. 18 Jun 2007); the Investors will receive on that Early Maturity Date, the Guaranteed Investment Amount (USD 100,000) and the Investment Returns accrued in the relevant Observation Period for such CPI Product as detailed below:
| Observation Periods |
Return Accrual Scheduled Trading Days (n) |
Scheduled Trading Days in the relevant Observation Period (N) |
Investment Return Rate |
Accrued Investment Return * |
Investment Return Payment Dates |
| 1 |
32** |
64 |
2.5%x32/64=
1.25% |
USD1,250 |
18 Dec 2006 |
| 2 |
0 |
65 |
2.5%x0/65=0% |
USD0 |
16 Mar 2007 |
| 3 |
65 |
65 |
2.5%x65/65=
2.5% |
USD2,500 |
18 Jun 2007 |
| * |
Investment Return = Guaranteed Investment Amount x Investment Return Rate for the relevant Observation Period |
| Total Redemption Amount which the Investors shall be entitled to for the whole investment period |
| = |
Guaranteed Investment Amount + total Investment Returns for the 3 Observation Periods |
| = |
USD100,000+(USD1,250+USD0+USD2,500) |
| = |
USD103,750 |
| ** |
The number of Return Accrual Scheduled Trading Day for accruing Investment Returns in the first Observation Period is 32 days, meaning that on each of those days, the Closing Stock Price of the Worst Performing Stock in the stock basket on such day is greater than its Return Accrual Trigger Stock Price. |
Scenario 2: Maturity
On all of the Early Maturity Observation Dates, the Closing Stock Price of the Worst Performing Stock in the stock basket is below its Early Maturity Trigger Stock Price, hence early maturity does not occur and the Investors will hold the CPI Product until the Maturity Date (i.e. 18 Mar 2008), upon which the Investors will receive the Guaranteed Investment Amount of USD100,000. The Investment Returns for the whole investment period are calculated as follows:
| Observation Periods |
Return Accrual Scheduled Trading Days (n) |
Scheduled Trading Days in the relevant Observation Period (N) |
Investment Return Rate |
Accrued Investment Return * |
Investment Return Payment Dates |
| 1 |
32** |
64 |
2.5%
x32/64=1.25% |
USD 1,250 |
18 Dec 2006 |
| 2 |
0 |
65 |
2.5%
x0/65=0% |
USD 0 |
16 Mar 2007 |
| 3 |
65 |
65 |
2.5%
x65/65=2.5% |
USD 2,500 |
18 Jun 2007 |
| 4 |
33 |
66 |
2.5%
x33/66=1.25% |
USD 1,250 |
18 Sept 2007 |
| 5 |
66 |
66 |
2.5%
x66/66=2.5% |
USD 2,500 |
18 Dec 2007 |
| 6 |
65 |
65 |
2.5%
x65/65=2.5% |
USD 2,500 |
18 Mar 2008 |
| Total Redemption Amount which the Investors shall be entitled to for the whole investment period |
| = |
Guaranteed Investment Amount + total Investment Returns for the 3 Observation Periods |
| = |
USD100,000+(USD1,250+USD0+USD2,500+
USD1,250+USD2,500+USD2,500) |
| = |
USD110,000 |
Investors should note that the scenarios above are for illustration only, and do not represent the actual or similar investment return which Investors will receive. The worst scenario and investment result in respect of this CPI Product will be the Investors receiving only the Guaranteed Investment Amount upon holding the CPI Product until the Maturity Date, or if the CPI Product is early terminated, in which case the Investors may not be able to recover all of the amount invested. |
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