Academy #2 Basic Turbos

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 Why important?  Possibility to enhance your return relative to a direct investment  Potentially more advantageous in short-term investing ◦ B&R Competition 3

 No expiration date  Value turbo never negative  So, existence of stop-loss level ◦ Losses at max total investment ◦ Removed from exchange ◦ Residual value 4

 Euronext Amsterdam  9:05 till 17:30  Normal bid (bied) – ask (laat) 5

 What products can be traded with turbos? ◦ Regular stocks ◦ Bonds ◦ Indices ◦ Currencies ◦ Commodities ◦... ◦ Turbos short vs. long 6

 Value equal to the difference between price of underlying value and financing level turbo Value turbo long = Price underlying value – financing level Value turbo short = Financing level – Price underlying value Note: Currency exchange rate 7

8  “Borrow money to invest”

 “Lend money”  Short in the underlying 9 Financing Level Short Stock Turbo value Financing Level Short Stock Turbo value Short Stock

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 Influences: ◦ Value turbo ◦ Leverage factor ◦ Dividend ◦ Interest 14

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 Financing costs/benefits ◦ Libor rate (Londen Interbank offered rate) ◦ Turbo short(costs) vs. Turbo long(benefits)  Transaction costs ◦ Bid/Ask-spread ◦ Brokerage fee  Taxes ◦ No paid out dividends -> no tax on dividends 16

 Price  Leverage  Stop-Loss 17

 Exchange rate risks ◦ Quanto for currency hedged!  Interest rate risk (changing)  Credit/Counterparty risk ◦ Bankruptcy ABN Amro 18

Value turbo long = price underlying value – financing level (ratio x exchange rate) Price underlying value points Financing level points Stop-loss level points Euro/dollar exchange rate1,25 Ratio100 Value turbo long8 Leverage11 19

 Scenario 1: ◦ Dow Jones increases with 400 points ◦ Return from till is 3,64% ◦ Value turbo? ◦ Return?  Scenario 2: ◦ Equal price. Anything happens? 20

 Scenario 3: ◦ Dow Jones decreases with 300 points ◦ Return from till is -2,73% ◦ Value turbo? ◦ Return 21

 Scenario 4: ◦ Dow Jones decreases with 800 points ◦ Stop-loss is and bank sells product for (-7,73%) ◦ Value turbo? ◦ Return?  Scenario 5: ◦ Scenario 4, but bank sells at 9.995? 22

 Opportunity to leverage  Huge profit- and loss potential  Don’t lose more then investment ◦ stop-loss  Easily tradable  Broad asortiment  Euronext Amsterdam  But.. Risk and costs involved! 23

Leverage turns good deals into great deals! - Herman “Hefboom” van Heden 24

 Activities & Lustrum  Almanac  Alumni  B&R Academy  Commercial Team  Investment Week & Symposium  Marketing ◦ 25

 Organize internal events: ◦ Wine tasting ◦ Poker tournament ◦ In-house events  Lustrum  Part time (6hr/week) 26

 Recap the highlights of this year  Get to know the society from the inside  Part-time (5 hrs/week) 27

 Connect old and new members  You can prove yourself!  No specific experience required  Part-time (5hrs/week) 28

 Help organizing the B&R Academy  Develop your knowledge and skill-set  Part-time (<5hrs/week) 29

 Get in touch with companies  Improve social & sales skill  Part-time (5-10hrs/week) 30

 Organize the biggest event of the year  Big responsibility  Part-time (10hrs/week from Oct-May) 31

 Responsible for external & internal marketing of events  Develop our strategy further  Part-time(5hrs/week) 32