Pricing Of Structured Financial Products And Design

Basically speaking, financial products belong to financial derivatives, therefore, developing this market means much to financial innovation of our country. Thanks to the booming security market we have just gone through, financial products market grew rapidly and many new products were created. Among all these products, some products promise clients very high revenue, which might only be unmoral phenomena and would not last long. Therefore, we have to review the pricing theory of financial products and make an empirical study on real products. And moreover, every financial derivate is a "zero-sum game", but every bank financial product promises clients a revenue, does that mean the bank suffer losses? To get a better understanding of this point, we have to make a study of the product design, which determines the performance of the products. In the past, it was believed that domestic banks pay much attention to products amount while foreign banks emphasizes products quality. Was it true? Was there a huge gap between domestic bank products and foreign bank products? We have to make all these questions clear.The paper can is divided into four chapters, the first of which is the classification of financial products and the Review, in which we use two meaningful methods to do classification and make a review of option pricing theory. The second chapter is the theory and the model, which contains B-S model and the Mentecalo method. The third chapter is the empirical study of the pricing of three products, two of which were created by CMB (China Merchants Bank Ltd), while the other was created by Standard Chartered Bank. In the third chapter, we discuss the designing methods of these products, and make a specific solution of the first product. The last chapter makes a compare of the three products and provide advice to products design.