Thread: Structured Note

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  1. #1
    Member
    Join Date
    Nov 2011
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    Coral Springs, Florida
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    10,793

    Structured Note

    My broker sent me some information on a structure note from Morgan Stanley. It pays 7% annual interest provided that the DOW, S&P and Russell 2000 are not below 30% of their price as set on January 29, 2020. If it is, the the interest is not paid that quarter. The note matures in 5 years. At maturity you receive all of your principal back unless the S&P 500, DOW and Russel 2000 are more than 30% below their price on January 29, 2021 and then the principal pay back would be reduced (i.e if it is 35% below the benchmark you would lose 5% in principal). Anybody else ever look at these? I think it likely the full principal would get paid back but there is certainly a risk that one of the indexes could be below 30% of the benchmark. I could also see missing an interest payment if we get a correction and that would lower the annual interest payment to 5.5% if one quarter is missed. I certainly wouldn't back the truck up on this one but I might buy a little bit for income.

  2. Member
    Join Date
    Jun 2006
    Location
    Wisconsin
    Posts
    5,105
    #2
    I wouldn’t touch that after January 20, 2021.