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Payout/Payoff
       
 
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Payout/Payoff

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Payout/Payoff
A general term used to describe the return provided by a Structured product or an Option. A lot of products pay a fixed Coupon plus additional returns linked to performance of the nderlying. If the embedded Option is path-dependent, the returns Will be a function of both the performance of the index and the payout formula. For example, the payout from a five-year quarterly Asian Option with a 70% participation of the Dow Jones Euro Stoxx 50 Index is equal to 70% of the average of 20 different prices over five years, and not the level of the index at maturity.
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