Business and Personal Finance Dictionary

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• CUBS
  
  Customized Upside Basket Securities (q.v.). Bear Stearns's proprietary debt securities, with participation in moves in an average over time of the index value of a basket of securities, but with downside protection. The underlying average equals an arithmetic average of the index values on the 24th of each month from issue through maturity. Thus, the underlying price is an average, and any optionality is an option on an arithmetic average. The holder may not redeem CUBS before maturity. For example, Bear Stearns listed a CUBS issue on 7/25/95 that matures on 7/24/98. The underlying index is a mischmasch of biotech, energy, and other stocks. The CUBS issue price is $3.33. The CUBS gives 90% participation in price moves. The minimum payoff is $3.00.
  
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