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03/01/2005: "Updated index for: Precipice bonds"

Precipice bonds and the wider lessons
Stuart Fowler's FT article (October 2003) looks at the wider implications of the precipice bonds scandal. The 'precipice' refers to the crossover from capital protection to leveraged capital loss. Structured products with a low probability of large loss may be getting rarer but complex products with downside risk protected (at a cost) and some upside participation are becoming more common. How should they be regulated? How to ensure the risks and payoffs are clear to consumers?