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Noteholders may be exposed to a market price risk when selling the Notes (Market
Price Risk)
The development of the market prices of the Notes depends on various factors, such as
changes in market interest rate levels, the policies of central banks, overall economic
developments, inflation rates and the lack of or excess demand for the relevant type of Note.
A holder of Notes is therefore exposed to the risk of an unfavourable development of the
market prices of the Notes that may materialise if holders sell the Notes prior to the final
maturity of such Notes. If a holder decides to hold the Notes until their final maturity, the
Notes will be redeemed at the amount set out in the relevant Final Terms.
Certain Notes may contain, or be combined with, an option, the price of which may be subject
to change and may thus influence the market price of such Notes. The option price (the option
premium) is influenced primarily by the difference between the price of the underlying asset
and the strike price, the time remaining for the option to be exercised, and the volatility of the
underlying asset. Affecting the option price to a lesser degree are factors such as interest
rates, market conditions, and the dividend rate of the underlying asset. Changes in the price
and in the volatility of the underlying asset strongly influence the option price. The value of an
option tends to decrease as its expiration date approaches and the option becomes worthless
after that date. The holder of such Notes is therefore exposed to the risk of an unfavourable
development of the price of the option contained in or combined with such Notes.
In the event that Notes are redeemed prior to their maturity, holders of such Notes may
be exposed to risks, including the risk that their investments will have a lower than
expected yield (Risk of Early Redemption)
The Final Terms show whether the Issuer has the right to call the Notes prior to maturity
(optional call right), if any, or whether the Notes will be subject to early redemption upon the
occurrence of an event specified in the Final Terms (an early redemption event). If the Issuer
redeems the Notes prior to maturity or the Notes are redeemed early due to an early
redemption event, the holders of such Notes are exposed to the risk that, due to early
redemption, their investments will have a lower yield than expected. The Issuer may exercise
its optional call right if the yield on comparable Notes in the capital markets falls, which means
that the investor may be able to reinvest the redemption proceeds only at a lower yield.
Investors should note that where the Terms and Conditions of the Notes provide for a right of
early redemption by the Issuer only, Noteholders usually receive a higher yield on their Notes
than they would if they were also granted a right to redeem the Notes early. Excluding the
Noteholders' right to redeem Notes prior to their maturity (general early redemption right) is
often a precondition for the Issuer being able to hedge its exposure under the Notes. Thus,
without early redemption by Noteholders being excluded, the Issuer would not be able to
issue Notes at all, or the Issuer would factor the potential hedging break costs into the
redemption amount of the Notes, thus reducing the yield investors receive from the Notes.
Investors should therefore carefully consider whether they think that a right of early
redemption only for the Issuer would be to their detriment and should, if they think that this is
the case, not invest in the Notes.
There is a risk that Noteholders may not be able to reinvest proceeds from the Notes in
such a way that they earn the same rate of return (Reinvestment Risk)
Noteholders may be subject to the risk that in the event of an early redemption interest or
dividends earned from an investment in the Notes cannot be reinvested in such a way that
they earn the same rate of return as the redeemed Notes.
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