6.4 - Equity Linked Structured Products Flashcards
1
Q
Tax Deferral Wrappers
A
r* = {1+(1+r)^N - 1}^(1/N) - 1
r* = after tax return on investment r = pretax return on investment N = number of years until distribution T = tax rate
2
Q
Tax Deferral w/ tax deduction
A
r* = [(1+r)^N * ((1-TN)/1-T0))]^(1/N) - 1
r* = after tax return r = pretax return N = years to withdrawal TN = tax rate at withdrawal T0 = tax rate at contribution
3
Q
Put Call Parity
A
call price - put price = asset price - present value of strike price
