Glossary

An agio or premium is the surcharge on the nominal value of an investment. In securies the agio / premium is usually referred to as asset-based fees.

 stock represents a participation in share capital of a corporation. As a shareholder you are co-owner of a company. The stock price is formed by supply and demand on the stock exchange. The price development is influenced,inter alia, by the development of the company's profit and the development of the capital market

A stock index reflects the development of several shares in a stock market, thus providing a certain standard of comparison for similar stocks.
The index is always calculated for a particular base period. Stock indices on the German market are for example the DAX (German leading index), DIMAX (German property market index) and DivDAX (15 DAX companies with the highest dividend). Along with the actual stock index, there are also indices that represent no stock quotes but financial derivatives dependent on share prices, such as the German volatility index VDAX.

Alpha Certificates are based on two underlying assets, which are put into relation to one another. The difference between the underlying assets is crucial for the development of the certificate​​. Thus, the certificate can develop positively even if both basic values fall. On the other hand, it is more difficult for a layperson to follow the development of the certificate. A German district court once described this certificate as "pure speculation paper with betting character." Alpha certificates may cause the total loss of invested capital.

see Agio.

Basket-Cer­ti­fi­ca­tes are a variation of in­dex-Certicates. Instead of just mapping the value of a stock or stock indices (base value), several stocks or other investment products are grouped in a "basket" and their common value is mapped.

The credit risk represents the risk that a debtor, eg due to his insolvency, is no longer (or only partially) able to pay the claims of his creditors.

With a bonus barrier cer­ti­fi­cate the investor receives one or more bonus payments depending on the performance of the underlying asset. In principle complete repayment is carried out at early maturity or at maturity of the nominal value. This changes when the price has reached or fallen below a predetermined barrier (also known as risk buffer or safety threshold) over the term. In that case, the repayment is based on the underlying asset. This means that both the total loss of capital is possible, as well as a profit can be achieved, provided that the upward development is not limited by a so-called cap. Depending on whether the barrier is lower or higher, the certificate is to be classified as safe or unsafe. The height of the barrier affects the probability of loss, nevertheless the structurally related risk of total loss still exists with this type of certificates.

A dividend is the part of the company's profits that is paid annually, semi annually or quarterly to shareholders. The extent to which shareholders will participate in the company's profit is a business and political decision dependent on the earnings of the company.

An Issuer is the issuer of a security, eg a certificate.

An investment is fungible, if it can be resold via a secondary market.

Closed-end real estate funds are direct corporate investments. In principle the investor becomes the shareholder of the fund. The investment amounts per share usually are from 10,000 Euros upwards. Closed-end funds are used primarily for individual project financing. Unlike open-end real estate funds, where capital can be deposited and removed again at any time the closed-end real estate fund is closed after a certain amount invested. Hence the name closed-end real estate fund. It is worth noting that the closed-end funds generally are not subject to state supervision or control. In addition to serious fund providers there is an abundance of dishonest ones. Every year, investors lose many millions of Euros in dubious closed-end real estate funds (see eg www.dubai-watchlist.com).

The profit margin is the difference between purchase and selling price. Profit margins are generally not subject to disclosure. Distinctive features may result from an advisory bank selling other products and receiving a profit margin as part of fixed-price contracts. In contrast to the sale of own products, their profit interest is not always obvious for the investor who receives the advice. This may cause a conflict of interest for the bank. Whether this results in a duty of disclosure is controversial and has not yet been explicitly clarified by the Supreme Court.

Knock-out Certificates use mathematical formulas to change gains and / or losses. The participation is closer to the underlying fluctations. Such levers can be used unilaterally, eg in such a way that the certificate acts as a pure index-certificate at a falling price of the underlying asset, however, significantly higher profits can be achieved through the use of the lever at an increasing price. For lever-certificates there is of total loss risk for the capital employed.

Real estate funds are basically investment companies whose capital investment consists primarily of property and buildings. Investors invest their money in real estate (eg office buildings, shopping centers, rental apartments). Thus the term real estate is used for this type of investment. It should be distinguished between open-ended funds and closed-end funds.  This differentiation is important for the catalog of rights and duties of the investors.

The value of an index cer­ti­fi­kate develops just like the underlying asset. The certificate securitizes the payment of a sum of money, which depends on the state of the underlying asset at maturity. In so-called performance indices, the dividends are included in the performance. In pure price indices the dividends are not taken into account. Certificates can also be issued on foreign indices, then, however, exchange rate effects are to be taken into account. Usually there are no agreements about fixed terms for index certificates. With index certificates there is risk of a total loss of the capital employed.

A person is considered insolvent when the payment obligations towards his creditors can no longer be met in the long term. Under German law an application to open insolvency proceedings can be filed at the relevant court by both creditors and the debtor. Usually the creditors then receive a payment in accordance with the so-called insolvency rate, ie often their original claim will be compensated at only a very small part.

In a Capital Guarantee Cer­ti­fi­cate the investor is guaranteed to get back at least the capital that is stated as a nominal amount on the certificate at the end of the term. If the investor has actually paid more (eg due to additionally payable sales charges), he bears the risk of loss for the difference. The capital protection is worthless when the credit risik for the issuer and the guarantor, who vouches for the repayment, has realized. Capital guarantee certificates are therefore only to be classified as safe over a "normal" course, there are risks here too.

A limited partnership is a particular corporate form which is based on a trade. In a limited partnership there are two types of shareholders: general partners and limited partners. General partners are unlimitedly liable with their entire assets. The second type of partners are limited partners, and are liable solely with their deposit and up to the amount of their deposit. Limited partners are excluded from management. The best known and most frequently selected form of investments is the so-called Ltd. with a limited liability company as general partner (GmbH & Co. KG).

A market maker is a broker who continuously provides bid and ask prices, and thus ensures the tradability of securities and balances temporary imbalances between supply and demand in less liquid securities.

Open-ended real aestate funds have the same legal arrangements as investment funds for Secutities. Here the Investment Act (InvG) applies. In this law, certain "rules" are laid down by the legislature. The real estate assets have to consist of at least ten objects and are managed by a capital investment company (mutual fund company) as fund assets. The Shareholders are indirectly co-owners of the real estate fund in the amount of their deposit. The shares are "freely" tradable. In addition, there is a take-back obligation for issued shares at the current rate. Since a lot of funds currently have liquidity problems, many funds have suspended redemption of shares.

A commission is the fee for a mostly-promoting activity. Advisory banks often receive commissions for the completion of business recommended by them. Thus conflicts of interest may arise from the expected commission payments in consulting. Normal commissions are delimited by the sub-case of rebates.

See Bonus barrier Certificate

Rebates are comissions paid not from the investment amount, but from openly reported amounts such as a premium. In an advisory the duty of disclosure results from the payment of rebates to banks: the investor is to be informed about the flow of rebates and their specific amount.

The bond, also called debenture or obligation, is a debt instrument (securities), in which the debtor (issuer) is obliged to the payment of debt and a current interest or to another service to the creditor. Die Schuld­ver­schrei­bun­gen wer­den als In­ha­ber-, Na­mens- oder Or­der­schuld­ver­schrei­bun­gen aus­ge­ge­ben. The bonds are issued as bearer bonds or registered bonds.

Already issued securities are being traded via secondary markets. Secondary markets include in particular the stock exchanges, however some securities are traded off-market.

See Bonus-Barrier-Certificate.

Special assets is the legal term for a fund. Thus is being expressed, that the fund assets are separated from the assets of the investment company. They are therefore protected against e.g. changes in value of other funds of the investment company and the investment company itself may not fall back on it.

Existing claims for damages may lapse, ie they can no longer be enforced judicially, when a certain time has elapsed. The rule of limitation of the Civil Code (BGB) is three years at the end of a calendar year, the period beginning on the date on which the claim arose. The knowledge of the facts underlying the claim is decisive for the commencement of the term. So there is a risk of limitation of the claim for  rebates only if the investor has knowledge of the payments. In part, other periods of limitation may apply for other claims for damages.

A security is an instrument which securitized a private right

In legal terms a certificate is a bond. In real terms, the issuer of the certificate receives a certain amount of money he must repay to the investor according to certain rules. A base value is always decisive, the development of which is virtually bet on. It depends on the configuration of "Betting Rules" whether this is a relatively secure certificate or a particularly risky and speculative certificate.