Liberty, which was acquired by Friends First last October, launched its Capital Options Bond recently. The bond offers investors a 100% capital guarantee and is based on a portfolio of 30 blue-chip stocks. The bond is a six-year investment and will pay an annual return of 10%, so long as each of the underlying stocks is above 80% of its value at the bond’s inception.
In the event that a stock falls below the 80% threshold when the return is due to be paid, investors forgo the 10% return and the stock drops out of the portfolio. If the remaining 29 stocks meet the 80% threshold at the next payment date, however, the 10% return is then paid for current and previous years. Tyrrell says