Inbased

Inbased refers to a type of financial instrument or strategy where an entity obtains funding or makes an investment based on a pre-determined set of criteria or a specific benchmark. This concept is often associated with structured finance and derivative products. For example, an inbased bond might have its coupon payments or principal repayment linked to the performance of an underlying asset, index, or market condition. This means the return for the investor is not fixed but varies according to the defined inbased factors.

The purpose of using inbased structures can be to mitigate risk, achieve specific investment objectives, or create customized financial solutions. It allows parties to tailor financial products to their unique needs and market views. However, the complexity of these instruments can also introduce new risks, such as basis risk, which arises from an imperfect correlation between the inbased element and the actual exposure being hedged or invested in. Understanding the precise terms and the underlying inbased mechanism is crucial for evaluating the potential rewards and risks involved.