Guaranteed bonds FTSE options too expensive

The price of FTSE 100 options is so expensive that providers of guaranteed bonds are having to increase capital risk to generate attractive headline income rates, writes Jane Wallace. According to a research by Merrill Lynch, 'Structured Retail Products June 1999', some products have only an 85% chance of generating the annual returns required to ensure investors receive full return of capital on maturity of the bond. Merrill Lynch has back tested the guaranteed bonds to 1970, using reconstructed indices if those now used were not then available. The tests show the percentage chances, o...