COMMERZBANK AKTIENGESELLSCHAFT

exposed to the reinvestment risk if market interest rates decline. That means investors may reinvest
the interest income paid to them only at the relevant lower interest rates then prevailing.
Reverse Floating Rate Notes
The interest income of reverse floating rate Notes is calculated in reverse proportion to the reference
rate: if the reference rate increases, interest income decreases whereas it increases if the reference
rate decreases. Unlike the price of ordinary floating rate Notes, the price of reverse floating rate Notes
is highly dependent on the yield of fixed rate Notes having the same maturity. Price fluctuations of
reverse floating rate Notes are parallel but are substantially sharper than those of fixed rate Notes
having a similar maturity. Investors are exposed to the risk that long-term market interest rates will
increase even if short-term interest rates decrease. In this case, increasing interest income cannot
adequately offset the decrease in the reverse floater’s price because such decrease is
disproportionate.
Non-interest bearing and Zero-Coupon Notes
Changes in market interest rates have a substantially stronger impact on the prices of non-interest
bearing Notes or zero coupon Notes than on the prices of ordinary Notes. With regard to zero-coupon
Notes because the discounted issue prices are substantially below par – with regard to non interest
bearing Notes because any payments on the Notes are only scheduled to be made at maturity. If
market interest rates increase, non-interest bearing Notes or zero coupon Notes can suffer higher
price losses than other Notes having the same maturity and a comparable credit rating. Hence, noninterest
bearing Notes or zero coupon Notes are a type of investment associated with a particularly
high price risk.
Notes containing Early Redemption Rights of the Issuer
The Final Terms for a particular issue of Notes may provide for a non credit linked right of termination
of the Issuer. Such non credit linked right of early redemption is often provided for notes in periods of
high interest rates. If the market interest rates decrease, the risk to Noteholders that the Issuer will
exercise its right of early redemption increases. As a consequence, the yields received upon
redemption may be lower than expected, and the early redemption amount of the Notes may be lower
than the purchase price for the Notes paid by the Noteholder. As a consequence, part of the capital
invested by the Noteholder may be lost, so that the Noteholder in such a case would not receive the
total amount of the capital invested. Furthermore, there is the possibility that Noteholders may invest
the amounts received upon early redemption only at a rate of return which is lower than that of the
Notes redeemed.
Foreign Currency Notes
A holder of Notes denominated in a foreign currency and a holder of dual currency Notes is exposed
to the risk of changes in currency exchange rates which may affect the yield of such Notes. Changes
in currency exchange rates result from various factors such as macro-economic factors, speculative
transactions and interventions by central banks and governments.
A change in the value of any foreign currency against the Euro, for example, will result in a
corresponding change in the Euro value of Notes denominated in a currency other than Euro and a
corresponding change in the Euro value of interest and principal payments made in a currency other
than in Euro in accordance with the Terms and Conditions of such Notes. If on the one hand the
exchange rate underlying the Notes falls and the other hand the value of the Specified Currency of the
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