LWI - wizard of oz?

The sum of the square roots of any two sides of an isosceles triangle is equal to the square root of the remaining side...well, apparently scarecrow was attentive in school and learned about Phytagoras.

The mathematical skills we ask in order to understand our product are even more basic, just elementary operations...also we know that you are all specialist in solution finding for infinite equations systems ...etc..

How can we make profit with our LWI we were asked?

???? FAST ANSWER ????
... for fast reader: We earn a maximum of 5% when the index is not increasing more than 267% either we lose.

???? COMPLETE ANSWER ?????
...for interested folks:

a) The calculation of the index is done the following way. At spot date when our product will start we take sum of the values of 1 share of all of the considered titles. This sum is put in relation to a value of 1000 points which is our spot reference. For each share a weight is then calculated. This weight is a multiplication factor which will be applied each time we calculate the actual value of the index. Paid dividends are also included in the calculation as they will be added to share value.

b) The money we get over the IPO we will invest according our LEM strategy and with high profitability, even higher as with LWI...we hope so.

c) If the index will decrease we earn the 5% which are not returned.

d) After the formula we give in our prospectus there is a limit where our product turns into a loss for us, lets develop this together..

Reference spot (Si,0) : Fixed when approved
Final fixing spot (Si,t) : Fixed when reached, t= final date
Exercise price (K) : 100% of reference spot (Si,0)
Capital protection (G) : 95%
Participation (P) : 1.03
Remboursement formula (A):

A = [G + P x Max (0, (Si,t - K)/Si,0)]

Example 1
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If Index at final date has a neg. performance of -10%, the investor get 95% of his capital back. In other words he has a loss of 5% and we a win of 5%

Example 2
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if index at final date has a positive performance of 50% after formula (A) the investor will get back 146.5% of his capital which is a win of 46.5%. We earn 3.5%

Example 3
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if index at final date has a positive performance of 300% after formula (A) the investor will get back 301% of his capital which is a win of 201%. We have a loss of 1%.

Threshold for loss is reached for us if increase of index is > 267%! I agree that our benefits are rather small but they are real. We don't want to rob our clients just participate a bit on their gains...;-)

Greetz
Casper Trebuchet