OREANDA-NEWS. August 10, 2010. These investment deposits are term deposits of AS SEB Pank (SEB), whose guaranteed interest is 0.10% on a yearly basis and additional interest is associated with the increase in the portfolio of equities of Eastern Europe and Russia. The amount of the deposit is 100% protected by the end of the deposit period, reported the press-centre of SEB Pank.

The rate of return of Investment Deposit Slavic Giants is related to price movements in the equity portfolio that is the underlying asset of the deposit. The portfolio contains the equities of ten Russian and Eastern European companies in equal proportions.

Calculation of return
The return on the underlying asset is calculated on the basis of the equally weighted (1/10) returns on the shares in the portfolio. Return on shares is found by comparing the initial value of a share to its final value, but the return on the four best performing shares is fixed at 30% regardless of whether the actual return on them is higher or lower than said level. Actual return is considered in the case of the remaining six shares.

if the return on all shares in the portfolio is -30%, the return on the underlying asset is calculated as follows:
(4 * 30% + 6 * (–30%)) / 10 = –6%

if the return on all shares in the portfolio is 10%, the return on the underlying asset is calculated as follows:
(4 * 30% + 6 * 10%) / 10 = 18%

if the return on all shares in the portfolio is 50%, the return on the underlying asset is calculated as follows:
(4 * 30% + 6 * 50%) / 10 = 42%

No additional interest is earned on Investment Deposit Slavic Giants if the return on the underlying asset is negative.

Why invest in the Investment Deposit Slavic Giants?
Capital-protected investment
The companies selected as the underlying asset are market leaders in their sectors
The income earned on investment deposits is exempt from income tax

However, you have to keep in mind that
Additional interest on investment deposits is not guaranteed
Equity prices may not rise as the investors’ willingness to take risks is diminishing
You may lose the risk premium you pay on deposits with a risk premium

This offer is valid until 25 August 2010.