… rising underlying prices?
When the underlying price rises, also the value of the garant bond rises. The participation on the positive performance of the underlying may be capped. Structures with coupon offer an annual coupon payment in addition.
… stable underlying prices?
With sideways moving prices also the value of the garant bond stays relatively stable. If there is a positive performance on the valuation date, investors have a positive return. If the underlying performs slightly negatively, then the level of redemption depends on the respective minimum redemption amount. Structures with a coupon offer an annual coupon payment, regardless of the performance of the underlying.
… falling underlying prices?
If the price of the underlying is falling, then there is the capital guarantee and the minimum redemption is according to the predefined level of the nominal amount (usually 90 % or 100 %) upon maturity. Structures with coupon offer an annual coupon payment in addition.