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- How is profit from working on a Capital Account calculated?
How is profit from working on a Capital Account calculated?
Let’s consider some examples of how profit is calculated for Capital Accounts1.
Suppose a client bought a structured product for 10,000 USD with a 90% capital protection level (CPL).
The clients activates a Capital Account and receives a free 7,200 USD credit limit, taking the following formula into account: CPL / 100 x cost of product x 0.8. At maturity, the following is possible:
The Client makes a profit on the structured product.
Suppose the return on the structured product is 20%. Then:
Example №1
Let’s say that at maturity the client made 1,100 USD on their Capital Account. At maturity they’ll receive 1,100 + 12,000 = 13,100 USD.
Example №2
Let’s say that at maturity the client lost 1,100 USD on their Capital Account. At maturity an adjustment will occur: the negative amount which the client incurred as a loss on the Capital Account will be deducted from the outcome of their investment on the structured product. The client will receive 12,000 - 1,100 = 10,900 USD on their transitory account.
No return on structured product. Then:
Example №1>
Let’s say at maturity the client has made 1,100 USD using their Capital Account, but their structured product hasn’t made a profit. Consequently, at maturity the client receives 90% from their capital protection level: 9,000 + 1,100 = 10,100 USD.
Example №2
Let’s say that at maturity the client has lost 1,100 through trading using his Capital Account. In this instance, at maturity an adjustment will occur: the negative amount which the client incurred as a loss on the Capital Account will be deducted from the outcome of their investment on the structured product. The client will receive 9,000 – 1,100 = 7,900 USD on their transitory account.
Please note:
- ↑ None of the above examples take commission for the forming of a structured product into account. Such commission is deducted at maturity of the structured product.
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More Frequently Asked Questions about Capital account:
- How can I use the funds on my Capital Account?
- In what currency can I open a Capital Account and how is the profit on it calculated?
- What is a “financing limit”, what funds limit can I expect when buying a Structured Product?
- Where can I see information about my Capital Account?
- What are the conditions for using a Capital Account?
- How can I start working with a Capital Account and do I need to pay commission for using one?
- How can I make a deposit to my trading or investment account with loan status?
- When and how can I withdraw funds from a Capital Account?
- How is profit from working on a Capital Account calculated?
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