Rresearch On The Yields And Risks Of Structured Financial Products

Structured financial product refers to an innovative financial instrument which is a combination of fixed income contract with derivative contract. Structured financial products consists of two parts:the fixed income part and the derivative part, because the derivative component of is always something similar to an option, the structured financial products is usually considered to be made from a bond and an option.With the accumulation of the national wealth, China’s asset management market have great potentiality, while the competition among financial institutions is increasingly fierce and financial disintermediation develops, banks have chosen to issue financial products to attract deposits. The ability of Chinese banks" design, issue and risk control is relatively weak, instead of structured financial products,Chinese banks mainly issue bond-like and monetary financial products, structured financial products were originally developed by large multinational financial agencies and foreign banks today still dominate china structured finance market.Because the complexity of the design of asset’s yield t and the change of objects linked are difficult to predict. The level of risk of structured products is often high, zero or even negative final yields appeared in recent years, which were much lower than what investors had expected, which triggered the disputes between investors and issuing banks. The article is ready to select out six representative structural financial products, establish models according to the terms of descriptions, simulate objects’ changes linked by using Monte Carlo method, conduct quantified research on structured products, make accurate measurement of returns and risk of the bank structured financial products. The author hope that The conclusion of the study can help banks understand the value and influence of each part of the financial product value, improve the ability of design and pricing, strengthen the ability of risk identification and control, reducing the asymmetry in information, so that customers really understand the product, which can help to reduce the disputes.The first part of this paper mainly introduces the development history and current situation of structured financial products, which leads to the background and significance of this thesis. The second part firstly make a simple introduction to the related literatures, and then introduces the basic concepts of financial products, such as the definition, the design idea and the risk. The third part introduces the pricing theory of structured financial products and Monte Carlo simulation method. The fourth part mainly make empirical researches of the bank structured financial products, six structured products issued in2013are selected, make simulation of objects linked by Monte Carlo method, obtain the distribution and probability of occurrence of return according to the function, calculate the variation of financial products when the parameters change, the fourth part summary the data, make an analysis of return and risk of six paragraph of structured financial products on the whole, come to the conclusion of the study, and finally point out the innovation and insufficiency.