Bear Stearns collapse impacts on reverse convertible notes

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Market volatility has taken an unprecedented toll on reverse convertible and corridor-style notes in the US. Tumbles in financial stock have hit barrier-style notes hard as single financial stocks fell by up to 40% amid the collapse of Bear Stearns.

Financial stocks had become a popular underlying after last summer's volatility had enabled issuers to include attractive coupons in reverse convertible structures, while slipping bank share prices had left investors banking on climbs in that sector.

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