Spread certificate

Type of security that features a spread with an upper and a lower limit set by the issuer

If the price of the underlying share when the certificate matures is within the spread, the investor gets the share plus a cash adjustment in the amount of the difference between the price and lower limit. If the price is below the spread, he only gets the share; if it is above the price, he gets a cash adjustment in the amount of the upper limit plus the difference between the upper and lower limit. Spread certificates are worth it primarily when the investor expects neither strong price gains nor high losses of the underlying up to the end of the certificate’s maturity.

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