Recommending structured products as investment strategy : sales pitch or sound advice?
MetadataShow full item record
- Master Thesis 
This master thesis in financial economics asks whether banks have taken advantage of a superior informational position in the sale of so-called structured products. Structured products sold by Norwegian financial institutions have received extensive criticism over the last few years, and estimates show that customers may have lost more than 14 billion NOK by investing in these products. The first part of this thesis will present the reader with a theoretical framework for understanding structured products, before providing an overview of the history of these products in the Norwegian context. The thesis will then use the Monte Carlo simulation technique to conduct a thorough analysis of the two products DnB Global and Sektor 2000/2006, which due to an impending litigation is expected to set presedence for how complaints on these types of products will be treated in the legal system. The analysis confirms the results from previous studies that these products had a negative expected return when debt financed. In the second part of this paper I will conduct a more qualitative analysis, discussing issues such as why distributors were selling these products and why customers were unable to understand that the products represented inferior investment strategies. The thesis concludes that the banks have misused their customers' trust and confidence in the sale of structured products.