Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-259205
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Pricing Supplement
Dated June 28, 2022
to the Product Prospectus Supplement No. CCBN-1 Dated September 14, 2021, the Prospectus Supplement Dated September 14, 2021
and the Prospectus Dated September 14, 2021
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$2,482,000
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon Linked to a Basket of Two Equity
Securities, Due July 3, 2025
Royal Bank of Canada
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||
Issuer:
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Royal Bank of Canada
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Stock Exchange Listing:
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None
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Trade Date:
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June 28, 2022
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Principal Amount:
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$1,000 per Note
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Issue Date:
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June 30, 2022
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Maturity Date:
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July 3, 2025
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Observation Dates:
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Quarterly, as set forth below.
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Coupon Payment Dates:
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Quarterly, as set forth below.
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Valuation Date:
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June 30, 2025
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Contingent Coupon Rate:
|
13.25% per annum
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Contingent Coupon and
Memory Coupon
Feature:
|
If the Observation Level (as defined below) of the Basket is greater than or equal to its Coupon Barrier (50% of the Initial Value) on the applicable
Observation Date, we will pay the Contingent Coupon applicable to the corresponding Observation Date, together with any Contingent Coupons that were not previously paid. You may not receive any Contingent Coupons during the term of the Notes.
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||
Payment at Maturity (if
held to maturity):
|
If the Notes are not previously called, we will pay you at maturity an amount based on the Final Basket Level (as defined below).
For each $1,000 in principal amount, $1,000, unless the Final Basket Level is less than the Trigger Level (50% of the Initial Value). You will also receive the final Contingent
Coupon (and any previously unpaid Contingent Coupons) if the Final Basket Level is greater than the Coupon Barrier.
If the Final Basket Level is less than its Trigger Level, then the investor will receive at maturity, for each $1,000 in principal amount, an amount that is less than the
principal amount, representing the percentage decrease in the value of the Basket from the Trade Date to the Valuation Date.
Investors in the Notes could lose some or all of their principal amount if the Final Basket Level is less than the Trigger Level.
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||
Call Feature:
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If the Observation Level of the Basket is greater than or equal to the Initial Basket Level starting on December 28, 2022 and on any Observation Date
thereafter, the Notes will be automatically called for 100% of their principal amount, plus the Contingent Coupon applicable to the corresponding Observation Date, together with any unpaid Contingent Coupons.
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Call Settlement Dates:
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The Coupon Payment Date corresponding to that Observation Date.
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CUSIP:
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78016FMS0
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Per Note
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Total
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||
Price to public(1)
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100.00%
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$2,482,000
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|
Underwriting discounts and commissions(1)
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2.25%
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$55,845
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Proceeds to Royal Bank of Canada
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97.75%
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$2,426,155
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(1) |
RBC Capital Markets, LLC (“RBCCM”), acting as our agent, will receive a commission of $22.50 per $1,000 in principal amount of the Notes and will use a portion of that commission to allow selling concessions to
other dealers of up to $22.50 per $1,000 in principal amount of the Notes. The other dealers may forgo, in their sole discretion, some or all of their selling concessions. See “Supplemental Plan of Distribution (Conflicts of Interest)” below.
Certain dealers who purchase the Notes for sale to certain fee-based advisory accounts may forego some or all of their underwriting discount or selling concessions. The public offering price for investors purchasing the Notes in these
accounts may be between $977.50 and $1,000 per $1,000 in principal amount.
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
General:
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This pricing supplement relates to an offering of Auto-Callable Contingent Coupon Barrier Notes with Memory Coupon (the “Notes”) linked to a basket (the “Basket”) of two
equity securities (the “Reference Stocks,” or the “Basket Components”).
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Trade Date:
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June 28, 2022
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Issue Date:
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June 30, 2022
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Valuation Date:
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June 30, 2025
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Maturity Date:
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July 3, 2025
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Denominations:
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Minimum denomination of $1,000, and integral multiples of $1,000 thereafter.
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Contingent Coupon and
Memory Coupon Feature:
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We will pay you a Contingent Coupon during the term of the Notes, periodically in arrears on each Coupon Payment Date, under the conditions described below:
• If the
Observation Level of the Basket is greater than or equal to the Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon applicable to that Observation Date, together with any Contingent Coupons that were
previously unpaid.
• If the
Observation Level of the Basket is less than the Coupon Barrier on the applicable Observation Date, we will not pay you the Contingent Coupon applicable to that Observation Date.
You may not receive a Contingent Coupon for one or more quarterly periods during the term of the Notes. For the avoidance of doubt, if an unpaid Contingent
Coupon is paid on a subsequent Coupon Payment Date, that unpaid Contingent Coupon will not be paid on any Coupon Payment Date thereafter.
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Observation Level:
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The “Observation Level” will be calculated based on the weighted returns of the Reference Stocks as of the applicable Observation Date, and will be equal to:
100 x [1 + (1/2 of the Reference Stock Return for OXY) + (1/2 of the Reference Stock Return for MRO)].
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Reference Stock Return:
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For each Reference Stock, the Reference Stock Return will be:
Observation Price – Initial Price
Initial Price
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Initial Price:
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For each Reference Stock, its closing price on the Trade Date, as determined by the Calculation Agent, as set forth below, subject to adjustment as set forth in the product prospectus
supplement.
OXY: $61.71
MRO: $24.13
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|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
Observation Price:
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For each Reference Stock, its closing price on the applicable Observation Date, as determined by the Calculation Agent, subject to adjustment as set forth in the product prospectus supplement.
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Contingent Coupon Rate:
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13.25% per annum (3.3125% of the principal amount on each applicable Coupon Payment Date).
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Observation Dates:
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Quarterly on September 28, 2022, December 28, 2022, March 28, 2023, June 28, 2023, September 28, 2023, December 28, 2023, March 28, 2024, June 28, 2024, September 30, 2024,
December 30, 2024, March 28, 2025 and the Valuation Date.
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Coupon Payment Dates:
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The Contingent Coupon, if payable, will be paid quarterly on October 3, 2022, January 3, 2023, March 31, 2023, July 3, 2023, October 3, 2023, January 3, 2024, April 3, 2024,
July 3, 2024, October 3, 2024, January 3, 2025, April 2, 2025 and the Maturity Date.
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Record Dates:
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The record date for each Coupon Payment Date will be one business day prior to that scheduled Coupon Payment Date; provided, however, that any Contingent Coupons payable at
maturity or upon a call will be payable to the person to whom the payment at maturity or upon the call, as the case may be, will be payable.
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Call Feature:
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If, starting on December 28, 2022 and on any Observation Date thereafter, the Observation Level of the Basket is greater than or equal
to the Initial Basket Level, then the Notes will be automatically called.
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Payment if Called:
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If the Notes are automatically called, then, on the applicable Coupon Payment Date, for each $1,000 principal amount, you will receive $1,000 plus the Contingent Coupon
otherwise due on that Coupon Payment Date and any previously unpaid Contingent Coupons.
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Call Settlement Dates:
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If the Notes are called on an Observation Date, the Call Settlement Date will be the Coupon Payment Date corresponding to that Observation Date.
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Initial Basket Level:
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100.00
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Final Basket Level:
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The Observation Level of the Basket on the final Observation Date (the Valuation Date).
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Trigger Level and Coupon Barrier:
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50.00, or 50% of the Initial Basket Level.
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Payment at Maturity (if
not previously called and
held to maturity):
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If the Notes are not previously called, we will pay you at maturity an amount based on the Final Basket Level:
• If the Final Basket Level is
greater than or equal to the Trigger Level, we will pay you at maturity a cash payment equal to the principal amount. You will also receive the final Contingent Coupon (and any previously unpaid contingent Coupons) if the Final Basket Level
is greater than the Coupon Barrier.
• If the Final Basket Level is
less than the Trigger Level, you will receive at maturity, for each $1,000 in principal amount, an amount calculated as follows:
$1,000 + ($1,000 x Percentage Change)
The amount that you will receive in this case will be less than your principal amount, if anything, resulting in a loss that is proportionate to the decline in the value of the
Basket from the Trade Date to the Valuation Date. Investors in the Notes will lose some or all of their principal amount if the Final Basket Level is less than its Trigger Level.
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Stock Settlement:
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Not applicable. Payments on the Notes will be made solely in cash.
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Percentage Change:
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Final Basket Level – Initial Basket Level
Initial Basket Level
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|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
Market Disruption Events:
|
The occurrence of a market disruption event (or a non-trading day) as to either of the Reference Stocks will result in the postponement of an Observation Date or the
Valuation Date as to that Reference Stock, as described in the product prospectus supplement, but not to any non-affected Reference Stock.
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Calculation Agent:
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RBC Capital Markets, LLC (“RBCCM”)
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U.S. Tax Treatment:
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By purchasing a Note, each holder agrees (in the absence of a change in law, an administrative determination or a judicial ruling to the contrary) to treat the Notes as a
callable pre-paid cash-settled contingent income-bearing derivative contract linked to the Reference Stocks for U.S. federal income tax purposes. However, the U.S. federal income tax consequences of your investment in the Notes are uncertain
and the Internal Revenue Service could assert that the Notes should be taxed in a manner that is different from that described in the preceding sentence. Please see the section below, “Supplemental Discussion of U.S. Federal Income Tax
Consequences,” and the discussion (including the opinion of Ashurst LLP, our special U.S. tax counsel) in the product prospectus supplement dated September 14, 2021 under “Supplemental Discussion of U.S. Federal Income Tax Consequences,”
which apply to the Notes.
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Secondary Market:
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RBCCM (or one of its affiliates), though not obligated to do so, may maintain a secondary market in the Notes after the issue date. The amount that you may receive upon
sale of your Notes prior to maturity may be less than the principal amount.
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Listing:
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The Notes will not be listed on any securities exchange.
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Settlement:
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DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under “Ownership and Book-Entry Issuance” in the prospectus
dated September 14, 2021).
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Terms Incorporated in the
Master Note:
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All of the terms appearing above the item captioned “Secondary Market” on pages P-2 and P-3 of this pricing supplement and the terms appearing under the caption “General
Terms of the Notes” in the product prospectus supplement dated September 14, 2021, as modified by this pricing supplement.
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|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
Initial Basket Level:
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100.00
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Trigger Level and Coupon Barrier:
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50.00, which is 50% of the Initial Basket Level
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Contingent Coupon Rate:
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13.25% per annum (or 3.3125% of the principal amount on each applicable Coupon Payment Date)
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Contingent Coupon Amount:
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$33.125 for each applicable Coupon Payment Date
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Observation Dates:
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Quarterly
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Principal Amount:
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$1,000 per Note
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Hypothetical Final
Basket Level
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Payment at Maturity
as Percentage of
Principal Amount
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Payment at Maturity
(assuming that the Notes
were not previously called)
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150.00
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100.00%*
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$1,000.00*
|
140.00
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100.00%*
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$1,000.00*
|
130.00
|
100.00%*
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$1,000.00*
|
120.00
|
100.00%*
|
$1,000.00*
|
110.00
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100.00%*
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$1,000.00*
|
100.00
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100.00%*
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$1,000.00*
|
90.00
|
100.00%*
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$1,000.00*
|
80.00
|
100.00%*
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$1,000.00*
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70.00
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100.00%*
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$1,000.00*
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60.00
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100.00%*
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$1,000.00*
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50.00
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100.00%*
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$1,000.00*
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49.99
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49.99%
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$499.90
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40.00
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40.00%
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$400.00
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30.00
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30.00%
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$300.00
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20.00
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20.00%
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$200.00
|
10.00
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10.00%
|
$100.00
|
0.00
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0.00%
|
$0.00
|
|
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Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
• |
You May Lose Some or All of the Principal Amount at Maturity — Investors in the Notes could lose all or a substantial portion of their principal amount if there is a decline
in the value of the Basket between the Trade Date and the Valuation Date. If the Notes are not called and the Final Basket Value on the Valuation Date is less than its Trigger Level, the amount of cash that you receive at maturity will
represent a loss of your principal that is proportionate to the decline in the value of the Basket from the Trade Date to the Valuation Date. Any Contingent Coupons received on the Notes prior to the Maturity Date may not be sufficient to
compensate for any such loss.
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• |
The Notes Are Subject to an Automatic Call — If on any Observation Date beginning in December 2022, the Observation Level of the Basket is greater than or equal to the
Initial Basket Level, then the Notes will be automatically called. If the Notes are automatically called, then, on the applicable Call Settlement Date, for each $1,000 in principal amount, you will receive $1,000 plus the Contingent Coupon
otherwise due on the applicable Call Settlement Date (together with any previously unpaid Contingent Coupons). You will not receive any Contingent Coupons after the Call Settlement Date. You may be unable to reinvest your proceeds from the
automatic call in an investment with a return that is as high as the return on the Notes would have been if they had not been called.
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• |
You May Not Receive Any Contingent Coupons — We will not necessarily make any coupon payments on the Notes. If the value of the Basket on an Observation Date is less than
the Coupon Barrier, we will not pay you the Contingent Coupon applicable to that Observation Date. If the Observation Value of the Basket is less than its Coupon Barrier on each of the Observation Dates and on the Valuation Date, we will not
pay you any Contingent Coupons during the term of, and you will not receive a positive return on your Notes. Generally, this non-payment of the Contingent Coupon coincides with a period of greater risk of principal loss on your Notes.
Accordingly, if we do not pay the Contingent Coupon on the Maturity Date, you will also incur a loss of principal, because the Final Basket Level will be less than the Trigger Level. Notwithstanding the memory coupon feature of the Notes, it
is possible that any unpaid Contingent Coupons will remain unpaid for the remaining term of the Notes.
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• |
The Call Feature and the Contingent Coupon Feature Limit Your Potential Return — The return potential of the Notes is limited to the pre-specified Contingent Coupon Rate,
regardless of the appreciation of the Reference Stocks. In addition, the total return on the Notes will vary based on the number of Observation Dates on which the Contingent Coupon becomes payable prior to maturity or an automatic call.
Further, if the Notes are called due to the Call Feature, you will not receive any Contingent Coupons or any other payment in respect of any Observation Dates after the applicable Call Settlement Date. Since the Notes could be called as early
as December 2022, the total return on the Notes could be limited to six months. If the Notes are not called, you may be subject to the full downside performance of the Basket even though your potential return is limited to the Contingent
Coupon Rate. As a result, the return on an investment in the Notes could be less than the return on a direct investment in the Reference Stocks.
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• |
Your Return May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity — The return that you will receive on the Notes, which could be negative, may
be less than the return you could earn on other investments. Even if your return is positive, your return may be less than the return you would earn if you purchased one of our conventional senior interest bearing debt securities.
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• |
Payments on the Notes Are Subject to Our Credit Risk, and Changes in Our Credit Ratings Are Expected to Affect the Market Value of the Notes — The Notes are our senior
unsecured debt securities. As a result, your receipt of any Contingent Coupons, if payable, and the amount due on any relevant payment date is dependent upon our ability to repay our obligations on the applicable payment dates. This will be
the case even if the prices of the Reference Stocks increase after the Trade Date. No assurance can be given as to what our financial condition will be during the term of the Notes.
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|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
• |
Changes in the Value of One Basket Component May Be Offset by Changes in the Value of the Other Basket Component – A change in the value of one Basket Component may not
correlate with changes in the value of the other Basket Component. The value of one Basket Component may increase, while the value of the other Basket Component may not increase as much, or may even decrease. Therefore, in determining the
value of the Basket as of any time, increases in the value of one Reference Stock may be moderated, or wholly offset, by lesser increases or decreases in the value of the other Basket Component.
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• |
The Payments on the Notes Are Subject to Postponement Due to Market Disruption Events and Adjustments — The payment at maturity, each Observation Date and the Valuation Date
are subject to adjustment as described in the product prospectus supplement. For a description of what constitutes a market disruption event as well as the consequences of that market disruption event, see “General Terms of the Notes—Market
Disruption Events” in the product prospectus supplement.
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• |
There May Not Be an Active Trading Market for the Notes-Sales in the Secondary Market May Result in Significant Losses — There may be little or no secondary market for the
Notes. The Notes will not be listed on any securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so. RBCCM or any other affiliate of ours may stop any market-making
activities at any time. Even if a secondary market for the Notes develops, it may not provide significant liquidity or trade at prices advantageous to you. We expect that transaction costs in any secondary market would be high. As a result,
the difference between bid and asked prices for your Notes in any secondary market could be substantial.
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• |
The Initial Estimated Value of the Notes Is Less than the Price to the Public — The initial estimated value that is set forth on the
cover page of this pricing supplement does not represent a minimum price at which we, RBCCM or any of our affiliates would be willing to purchase the Notes in any secondary market (if any exists) at any time. If you attempt to sell the Notes
prior to maturity, their market value may be lower than the price you paid for them and the initial estimated value. This is due to, among other things, changes in the prices of the Reference Stocks, the borrowing rate we pay to issue
securities of this kind, and the inclusion in the price to the public of the underwriting discount and the estimated costs relating to our hedging of the Notes. 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. Assuming no change in market conditions or any
other relevant factors, the price, if any, at which you may be able to sell your Notes prior to maturity may be less than your original purchase price, as any such sale price would not be expected to include the underwriting discount and the
hedging costs relating to the Notes. In addition to bid-ask spreads, the value of the Notes determined by RBCCM for any secondary market price is expected to be based on the secondary rate rather than the internal funding rate used to price
the Notes and determine the initial estimated value. As a result, the secondary price will be less than if the internal funding rate was used. The Notes are not designed to be short-term trading instruments. Accordingly, you should be able
and willing to hold your Notes to maturity.
|
• |
The Initial Estimated Value of the Notes on the Cover Page of this Pricing Supplement Is an Estimate Only, Calculated as of the Time the Terms of the Notes Were Set — The
initial estimated value of the Notes is based on the value of our obligation to make the payments on the Notes, together with the mid-market value of the derivative embedded in the terms of the Notes. See “Structuring the Notes” below. Our
estimate is based on a variety of assumptions, including our credit spreads, expectations as to dividends, interest rates and volatility, and the expected term of the Notes. These assumptions are based on certain forecasts about future
events, which may prove to be incorrect. Other entities may value the Notes or similar securities at a price that is significantly different than we do.
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|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
• |
Owning the Notes Is Not the Same as Owning the Reference Stocks — The return on your Notes is unlikely to reflect the return you would realize if you actually owned shares
of the Reference Stocks. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on these securities during the term of your Notes. As an owner of the Notes, you will not have voting rights or
any other rights that holders of these securities may have. Furthermore, the Reference Stocks may appreciate substantially during the term of the Notes, while your potential return will be limited to the applicable Contingent Coupon payments.
|
• |
There Is No Affiliation Between the Reference Stock Issuers and RBCCM, and RBCCM Is Not Responsible for any Disclosure by the Reference Stock Issuers - We are not affiliated
with the Reference Stock Issuers. However, we and our affiliates may currently, or from time to time in the future engage, in business with either Reference Stock Issuer. Nevertheless, neither we nor our affiliates assume any responsibilities
for the accuracy or the completeness of any information that any other company prepares. You, as an investor in the Notes, should make your own investigation into the Reference Stocks.
|
• |
The Stocks Included in the Basket Are Concentrated in One Sector — All of the stocks included in the Basket are issued by companies in the energy industry. Although an
investment in the Notes will not give holders any ownership or other direct interests in the Basket Components, the return on an investment in the Notes will be subject to certain risks associated with a direct equity investment in companies
in this sector. Accordingly, by investing in the Notes, you will not benefit from the diversification which could result from an investment linked to companies that operate in multiple sectors.
|
• |
Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the Reference Stocks that are not for the
account of holders of the Notes or on their behalf. These trading activities may present a conflict between the holders’ interests in the Notes and the interests we and our affiliates will have in their proprietary accounts, in facilitating
transactions, including options and other derivatives transactions, for their customers and in accounts under their management. These trading activities, if they influence the share prices of the Reference Stocks, could be adverse to the
interests of the holders of the Notes. We and one or more of our affiliates may, at present or in the future, engage in business with the issuers of the Reference Stocks (the “Reference Stock Issuers”), including making loans to or providing
advisory services. These services could include investment banking and merger and acquisition advisory services. These activities may present a conflict between our or one or more of our affiliates’ obligations and your interests as a holder
of the Notes. Moreover, we, and our affiliates may have published, and in the future expect to publish, research reports with respect to the Reference Stocks. This research is modified from time to time without notice and may express opinions
or provide recommendations that are inconsistent with purchasing or holding the Notes. Any of these activities by us or one or more of our affiliates may affect the share prices of the Reference Stocks, and therefore, the market value of the
Notes
|
• |
You Must Rely on Your Own Evaluation of the Merits of an Investment Linked to the Reference Stocks — In the ordinary course of their business, our affiliates may have
expressed views on expected movements in the Reference Stocks, and may do so in the future. These views or reports may be communicated to our clients and clients of our affiliates. However, these views are subject to change from time to time.
Moreover, other professionals who transact business in markets relating to either Reference Stock may at any time have significantly different views from those of our affiliates. For these reasons, you are encouraged to derive information
concerning the Reference Stocks from multiple sources, and you should not rely solely on views expressed by our affiliates.
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to a Basket of
Two Equity Securities
Royal Bank of Canada
|