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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Bank of America Corporation | NYSE:BAC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -0.08% | 36.92 | 37.49 | 36.65 | 37.38 | 34,844,038 | 22:03:19 |
Subject to Completion
Prelim
inary Term Sheet dated August 26
, 2016
|
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333- 202354 (To Prospectus dated May 1, 2015, Prospectus Supplement dated January 20, 2016 and Product Supplement EQUITY INDICES LIRN-1 dated January 22, 2016) |
Per Unit
|
Total
|
|
Public offering price
(1)
|
$
10.00
|
$
|
Underwriting discount
(1)
|
$
0.20
|
$
|
Proceeds, before expenses, to
BAC
|
$
9.80
|
$
|
(1)
|
For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investor's household in this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.15 per unit, respectively.
See Supplement to the Plan of Distribution; Conflicts of Interest below.
|
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Capped Leveraged Index Return Notes
®
|
TS-
2
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
■
|
Product supplement EQUITY INDICES LIRN-1 dated January 22, 2016:
https://www.sec.gov/Archives/edgar/data/70858/000119312516435395/d129294d424b5.htm |
■
|
Series L MTN prospectus supplement dated January 20, 2016 and prospectus dated May 1, 2015:
http://www.sec.gov/Archives/edgar/data/70858/000119312516433708/d122981d424b3.htm |
You may wish to consider an investment in the notes if:
|
The notes may not be an appropriate investment for you if:
|
■
You anticipate that the Index will increase moderately from the Starting Value to the Ending Value.
■
You are willing to risk a loss of principal and return if the Index decreases from the Starting Value to an Ending Value that is below the Threshold Value.
■
You accept that the return on the notes will be capped.
■
You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities.
■
You are willing to forgo dividends or other benefits of owning the stocks included in the Index.
■
You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our actual and perceived creditworthiness, our internal funding rate and fees and charges on the notes.
■
You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
|
■
You believe that the Index will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return.
■
You seek 100% principal repayment or preservation of capital.
■
You seek an uncapped return on your investment.
■
You seek interest payments or other current income on your investment.
■
You want to receive dividends or other distributions paid on the stocks included in the Index.
■
You seek an investment for which there will be a liquid secondary market.
■
You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
|
Capped Leveraged Index Return Notes
®
|
TS-
3
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Capped Leveraged Index Return Notes
®
|
This graph reflects the returns on the notes, based on the Participation Rate of 200%, a Threshold Value of 90% of the Starting Value and a Capped Value of $11.40
per unit
(the midpoint of the Capped Value range of [$11.20 to $11.60]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index
, excluding dividends.
This graph has been prepared for purposes of illustration only.
|
Ending Value
|
Percentage Change from the Starting Value to the Ending Value
|
Redemption Amount per Unit
|
Total Rate of Return on the Notes
|
0.00
|
-100.00%
|
$1.00
|
-90.00%
|
50.00
|
-50.00%
|
$6.00
|
-40.00%
|
80.00
|
-20.00%
|
$9.00
|
-10.00%
|
90.00
(1)
|
-10.00%
|
$10.00
|
0.00%
|
94.00
|
-6.00%
|
$10.00
|
0.00%
|
95.00
|
-5.00%
|
$10.00
|
0.00%
|
97.00
|
-3.00%
|
$10.00
|
0.00%
|
100.00
(2)
|
0.00%
|
$10.00
|
0.00%
|
102.00
|
2.00%
|
$10.40
|
4.00%
|
103.00
|
3.00%
|
$10.60
|
6.00%
|
105.00
|
5.00%
|
$11.00
|
10.00%
|
110.00
|
10.00%
|
$11.40
(3)
|
14.00%
|
120.00
|
20.00%
|
$11.40
|
14.00%
|
130.00
|
30.00%
|
$11.40
|
14.00%
|
140.00
|
40.00%
|
$11.40
|
14.00%
|
150.00
|
50.00%
|
$11.40
|
14.00%
|
160.00
|
60.00%
|
$11.40
|
14.00%
|
(1)
|
This is the
hypothetical
Threshold Value.
|
(2)
|
The
hypothetical
Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
|
(3)
|
The Redemption Amount per unit cannot exceed the
hypothetical
Capped Value.
|
Capped Leveraged Index Return Notes
®
|
TS-
4
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Example 1
|
|
The Ending Value is 80.00, or 80.00% of the Starting Value:
|
|
Starting Value:
100.00
|
|
Threshold Value:
90.00
|
|
Ending Value:
80.00
|
|
|
Redemption Amount per unit
|
Example 2
|
The Ending Value is 95.00, or 95.00% of the Starting Value:
|
Starting Value:
100.00
|
Threshold Value:
90.00
|
Ending Value:
95.00
|
Redemption Amount (per unit)
= $10.00
, the principal amount, since the Ending Value is less than the Starting Value but equal to or greater than the Threshold Value.
|
Example 3
|
|
The Ending Value is 103.00, or 103.00% of the Starting Value:
|
|
Starting Value:
100.00
|
|
Ending Value:
103.00
|
|
|
= $10.60
Redemption Amount per unit
|
Example 4
|
|
The Ending Value is 130.00, or 130.00% of the Starting Value:
|
|
Starting Value:
100.00
|
|
Ending Value:
130.00
|
|
|
= $16.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $11.40 per unit
|
Capped Leveraged Index Return Notes
®
|
TS-
5
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
■
|
Depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.
|
■
|
Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
|
■
|
Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If we become insolvent or are unable to pay our obligations, you may lose your entire investment.
|
■
|
Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the stocks included in the Index.
|
■
|
The initial estimated value of the notes is an estimate only, determined as of a particular point in time by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads, our
internal funding
rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates and volatility, price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events, which may prove to be incorrect.
|
■
|
The public offering price you pay for the notes will exceed the initial estimated value. If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for them and lower than the initial estimated value. This is due to, among other things, changes in the
level of the Index
,
our internal funding rate
, and the inclusion in the public offering price of the underwriting discount and the hedging related charge, all as further described in Structuring the Notes
beginning
on page TS-
10
. These factors, together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways.
|
■
|
The initial estimated value does not represent a minimum or maximum price at which we, MLPF&S or any of our affiliates would be willing to purchase your notes in any secondary market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot be predicted with accuracy, including the performance of the
Index
, our creditworthiness and changes in market conditions.
|
■
|
A trading market is not expected to develop for the notes. Neither we nor MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your notes at any price in any secondary market.
|
■
|
Our business activities as a full service financial institution, including our commercial and investment banking activities, our hedging and trading activities (including trades in shares of companies included in the Index) and any hedging and trading activities we engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you.
|
■
|
The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests.
|
■
|
You will have no rights of a holder of the securities represented by the Index, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
|
■
|
While we or our affiliates may from time to time own securities of companies included in the Index, except to the extent that our common stock is included in the Index, we do not control any company included in the Index, and are not responsible for any disclosure made by any other company.
|
■
|
There may be potential conflicts of interest involving the calculation agent, which is an affiliate of ours. We have the right to appoint and remove the calculation agent.
|
■
|
The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary Tax Consequences below and U.S. Federal Income Tax Summary beginning on page PS-25 of product supplement EQUITY INDICES LIRN-1.
|
Capped Leveraged Index Return Notes
®
|
TS-
6
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Capped Leveraged Index Return Notes
®
|
TS-
7
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Capped Leveraged Index Return Notes
®
|
TS-
8
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
Capped Leveraged Index Return Notes
®
|
TS-
9
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
●
|
the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or any other family relationship not directly above or below the individual investor;
|
●
|
a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the investor’s household as described above;
and
|
●
|
a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the notes by a trust generally cannot be aggregated together with any purchases made by a trustee’s personal account.
|
Capped Leveraged Index Return Notes
®
|
TS-
10
|
Capped Leveraged Index Return Notes
®
Linked to the S&P 500 ® Index, due September , 2018 |
|
■
|
There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
|
■
|
You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax purposes as a single financial contract with respect to the
Index.
|
■
|
Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning
on page 99 of the prospectus
) generally will recognize capital gain or loss upon maturity or upon a sale or exchange of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year.
|
■
|
No assurance can be given that the
IRS
or any court will agree with this characterization and tax treatment.
|
Capped Leveraged Index Return Notes
®
|
TS-
11
|
1 Year Bank of America Chart |
1 Month Bank of America Chart |
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