An investment deposit consists of two components: the deposit part and the option part.
As the invested principal amount is 100% guaranteed on the end date of the deposit term, the bank deposits a part of the deposit amount invested by the client (the discounted deposit amount).
Discounted deposit amount – the invested principal amount that has been discounted with the bank's discounted interest rate for the relevant currency during the relevant period that is effective on the last selling date of the deposit.
Discounted interest rate – the bank's interest rate for the relevant currency during the relevant period that is effective on the last selling date of the deposit in discounted form.
Termination rate – bank's interest rate for 1 year
Option price – known only to the bank
Amount of options = deposit amount x participation rate
The invested principal amount is 1 000 euros
Duration of the investment deposit is 2 years (731 days)
The bank's two-year interest rate that is valid on the last selling day of the deposit is 5.5%
The bank's two-year interest rate in discounted form that is valid on the last selling day of the deposit is 4.95%
The termination rate is 4.75%
The participation rate is 55%
The option price is 9%
=> discounted deposit amount = 1 000 – (1 000 x 4.95% x 731/360) = 899.49 euros
=> amount of options = 1 000 x 55% = 550
Deposit part = 899.49 + (899.49 x 4.75% x 352 / 360) = 941.27 euros
Option part = 550 x 9% = 49.50 euros
Upon termination the client receives in total 941.27 + 49.50 = 990.77 euros.