In this chapter we introduce the main, and first, concepts that one has to grasp in order to build, evaluate, purchase and sell financial structured products. Structured finance denotes the art (and science) of designing financial products to satisfy the different needs of investors and borrowers as closely as possible. In this sense, it represents a specific technique and operation of the financial intermediation business. In fact, the traditional banking activity, . designing loans to provide firms with funds and deposits to attract funds from retail investors, along with managing the risk of a gap in their payoffs, was nothing but the most primitive example of a.
