Research On The Design Of Structured Financial Products In China 's Commercial Banks

In essence, structured financial products refer to a class of bank’s product which put fixed income securities and financial derivatives contracts together. In general, fixed-income securities invest stable profit assets, such as deposits. Financial derivatives contracts based on all kinds of options.The focus of this thesis is the designing and pricing of structured financial products. The thesis analyzes the situation of the domestic market and discusses the theories of designing and pricing. I try to design a structured financial product by referencing to the outstanding case of structured mutual fund. At last, I choose the appropriate pricing model for senior and subordinate tranches of it and analyze its risk and benefit. Although the development of structured financial products at an amazing speed in recent years, but their quality is low and structure is simple. This awkward design cannot meet the investors’ needs, because they have different levels of risk and return. The grading structured financial products divide the returns and risk asymmetrically. The investors who seek the stable profit and low risk tolerance prefer senior tranches, and the investors who pursue higher returns prefer the subordinate tranches. Finally, the thesis points out the deficiencies in the design of structured financial products market and puts toward the corresponding suggestions.