Terms

Structured Security

Structured products are securities created by investment banks and often combine two or more assets to create a product that pays out based on the performance of those underlying assets. Many structured products are hybrid securities, and have fixed maturity and may pay an interest rate or coupon rate. Structured products also frequently cap or limit the upside participation in the referenced asset, particularly if the security offers principal protection or an enhanced rate of interest. These products may be principal-protected or non-principal-protected. In each of those general categories, structured products can be further classified by investment strategy.