Filed Pursuant to Rule 433
Registration Statement No. 333-259205
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Preliminary Terms Supplement
Subject to Completion:
Dated September 29, 2022
Pricing Supplement Dated October __, 2022 to the Product Prospectus Supplement No. CCBN-2, the Prospectus Supplement, and the Prospectus Each Dated
September 14, 2021
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$__________
Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two Equity Indices, Due October 24, 2025
Royal Bank of Canada |
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Reference Indices
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Initial Levels
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Coupon Barriers
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Buffer Levels
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S&P 500® Index (“SPX”)
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[ ]
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70% of the Initial Level
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85% of the Initial Level
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Dow Jones Industrial AverageTM (“INDU”)
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[ ]
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70% of the Initial Level
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85% of the Initial Level
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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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October 21, 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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October 26, 2022
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Maturity Date:
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October 24, 2025
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Observation Dates:
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Semi-annually, as set forth below.
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Coupon Payment Dates:
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Semi-annually, as set forth below.
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Valuation Date:
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October 21, 2025
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Contingent Coupon Rate:
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8.25% per annum
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Final Level:
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For each Reference Index, its closing level on the Valuation Date.
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Contingent Coupon:
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If the closing level of each Reference Index is greater than or equal to its Coupon Barrier on the applicable Observation Date, we
will pay the Contingent Coupon on the applicable Coupon Payment Date. You may not receive any Contingent Coupons during the term of the Notes.
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Payment at Maturity (if
held to maturity):
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In addition to the final Contingent Coupon, if payable, we will pay you at maturity an amount based on the Final Level of the Lesser Performing Reference Index:
For each $1,000 in principal amount, unless the Final Level of the Lesser Performing Reference Index is less than its Buffer Level.
If the Final Level of the Lesser Performing Reference Index is less than its Buffer Level, then the investor will receive at maturity, for each $1,000 in principal amount, a cash payment equal to:
$1,000 + [$1,000 x (Underlying Return of the Lesser Performing Reference Index + 15%)]
Investors could lose a significant portion of the principal amount if the Final Level of the Lesser Performing Reference Index is less than its Buffer Level.
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Lesser Performing
Reference Index:
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The Reference Index with the lowest Underlying Return.
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Observation Dates:
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Semi-annually, as set forth below.
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CUSIP:
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78016FWA8
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Per Note
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Total
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Price to public
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100.00%
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$[ ]
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Underwriting discounts and commissions(1)
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0%
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$[ ]
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Proceeds to Royal Bank of Canada
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100%
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$[ ]
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
General:
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This terms supplement relates to an offering of Contingent Coupon Buffer Notes (the “Notes”) linked to the lesser performing of two equity indices (the
“Reference Indices”).
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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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October 21, 2022
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Issue Date:
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October 26, 2022
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Valuation Date:
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October 21, 2025
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Maturity Date:
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October 24, 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:
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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 closing level of each Reference Index is greater than or equal to its Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon applicable to that
Observation Date.
• If the closing level of any of the Reference Indices is less than its 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 semi-annual periods during the term of the Notes.
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Contingent Coupon
Rate:
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8.25% per annum (4.125% per Coupon Payment Date)
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Observation Dates and
Coupon Payment
Dates:
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Semi-annually, as set forth in the table below: |
Observation Dates:
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Coupon Payment Dates:
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April 21, 2023
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April 26, 2023
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October 23, 2023
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October 26, 2023
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April 22, 2024
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April 25, 2024
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October 21, 2024
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October 24, 2024
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April 21, 2025
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April 24, 2025
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October 21, 2025
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October 24, 2025
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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 Coupon payable at
maturity will be payable to the person to whom the payment at maturity will be payable.
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Initial Level:
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For each Reference Index, its closing level on the Trade Date.
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Final Level:
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For each Reference Index, its closing level on the Valuation Date.
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Coupon Barrier:
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For each Reference Index, 70% of its Initial Level.
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Buffer Level:
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For each Reference Index, 85% of its Initial Level.
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
Payment at Maturity (if
held to maturity):
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In addition to the final Contingent Coupon Payment, if payable, we will pay you at maturity an amount based on the Final Level of the Lesser Performing Reference Index:
1. If the Final Level of the Lesser Performing Reference Index is greater than or equal to its Buffer Level, we will pay you a cash payment equal to the principal amount.
2. If the Final Level of the Lesser Performing Reference Index is less than its Buffer Level, you will receive at maturity, for each $1,000 in principal amount, a cash payment
equal to:
$1,000 + [$1,000 x (Underlying Return of the Lesser Performing Reference Index + 15%)]
In this case, the amount of cash that you receive will be less than your principal amount, resulting in a loss that is proportionate to the decline of the Lesser Performing
Reference Index from the Trade Date to the Valuation Date beyond its Buffer Level. Investors in the Notes could lose a significant portion of the principal amount if the Final Level of the Lesser
Performing Reference Index is less than its Buffer Level.
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Underlying Return:
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With respect to each Reference Index:
Final Level – Initial Level
Initial Level
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Lesser Performing
Reference Index:
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The Reference Index with the lowest Underlying Return.
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Early Call:
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The Notes are not subject to an automatic call, or to a call at our option.
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Market Disruption
Events:
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The occurrence of a market disruption event (or a non-trading day) as to any of the Reference Indices will result
in the postponement of an Observation Date or the Valuation Date as to that Reference Index, as described in the product prospectus supplement, but not to any non-affected Reference Index.
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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 Note as a pre-paid cash-settled contingent income-bearing derivative contract linked to the Reference Indices 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 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).
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
Terms Incorporated in
the Master Note:
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All of the terms appearing above the item captioned “Secondary Market” on the cover page and pages P-2 and P-3 of this terms supplement and the terms
appearing under the caption “General Terms of the Notes” in the product prospectus supplement, as modified by this terms supplement.
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
Hypothetical Initial Level (for each Reference Index):
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100.00*
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Hypothetical Buffer Level and Coupon Barrier (for each Reference Index):
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85% and 70%, respectively, of each hypothetical
Initial Level
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Contingent Coupon Rate:
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8.25% per annum (4.125% per Coupon Payment
Date)
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Contingent Coupon Amount:
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$41.25 per Coupon Payment Date
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Observation Dates:
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Semi-annually
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Principal Amount:
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$1,000 per Note
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Hypothetical Final Level of the Lesser
Performing Reference Index
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Payment at Maturity as
Percentage of Principal Amount
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Cash Payment Amount per
$1,000 in Principal Amount
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130.00
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104.125%*
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$1,041.25*
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120.00
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104.125%*
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$1,041.25*
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110.00
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104.125%*
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$1,041.25*
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100.00
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104.125%*
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$1,041.25*
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90.00
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104.125%*
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$1,041.25*
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85.00
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104.125%*
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$1,041.25*
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80.00
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99.125%*
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$991.25*
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75.00
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94.125%*
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$941.25*
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70.00
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89.125%*
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$891.25*
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60.00
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75.00%
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$750.00
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50.00
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65.00%
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$650.00
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40.00
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55.00%
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$550.00
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30.00
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45.00%
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$450.00
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20.00
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35.00%
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$350.00
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10.00
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25.00%
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$250.00
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0.00
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15.00%
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$150.00
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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You May Receive Less than the Principal Amount at Maturity — Investors in the Notes could lose a substantial portion of their principal amount if there is a decline in the
level of the Lesser Performing Reference Index between the Trade Date and the Valuation Date. If the Final Level of the Lesser Performing Reference Index is less than its Buffer 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 closing level of the Lesser Performing Reference Index from the Trade Date to the Valuation Date beyond the applicable Buffer Level. Any Contingent Coupons
received on the Notes on or prior to the Maturity Date may not be sufficient to compensate for any such loss.
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You May Not Receive Any Contingent Coupons — We will not necessarily make any coupon payments on the Notes. If the closing level of any of the Reference Indices on an
Observation Date is less than its Coupon Barrier, we will not pay you the Contingent Coupon applicable to that Observation Date. If the closing level of either of the Reference Indices 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. This non-payment of the Contingent Coupon will coincide with the 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 Level of the Lesser Performing Reference Index will be less than its Buffer
Level.
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The Notes Are Linked to the Lesser Performing Reference Index, Even if the Other Reference Index Performs Better — Your return on the Notes will be linked to the lesser
performing of the Reference Indices. Even if the Final Level of the other Reference Index has increased compared to its Initial Level, or has experienced a decrease that is less than that of the Lesser Performing Reference Index, your
return will only be determined by reference to the performance of the Lesser Performing Reference Index, regardless of the performance of the other Reference Index. Because each Reference Index tracks a different segment of the U.S.
securities markets, it is possible that both Reference Indices will decline in value during the term of the Notes.
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Your Payment on the Notes Will Be Determined by Reference to Each Reference Index Individually, Not to a Basket, and the Payment at Maturity Will Be Based on the Performance of
the Lesser Performing Reference Index — The Payment at Maturity will be determined only by reference to the performance of the Lesser Performing Reference Index, regardless of the performance of the other Reference Index. The
Notes are not linked to a weighted basket, in which the risk may be mitigated and diversified among each of the basket components. For example, in the case of notes linked to a weighted basket, the return would depend on the weighted
aggregate performance of the basket components reflected as the basket return. As a result, the depreciation of one basket component could be mitigated by the appreciation of the other basket component, as scaled by the weighting of that
basket component. However, in the case of the Notes, the individual performance of each of the Reference Indices would not be combined, and the depreciation of one Reference Index would not be mitigated by any appreciation of the other
Reference Index. Instead, your return will depend solely on the Final Level of the Lesser Performing Reference Index.
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The Contingent Coupon Feature Limits 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 Indices. 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. As a result, the return on an investment
in the Notes could be less than the return on a direct investment in securities included in the Reference Indices.
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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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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Owning the Notes Is Not the Same as Owning the Securities Represented by the Reference Indices — The return on your Notes is unlikely to reflect the return you would
realize if you actually owned the securities represented by the Reference Indices. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on those 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 the securities represented by the Reference Indices may have. Furthermore, the Reference Indices may appreciate substantially during the term of
the Notes, while your potential return will be limited to the applicable Contingent Coupon payments.
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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 levels of the Reference Indices increase after the Trade Date. No assurance can be given as to what our financial condition will be at any time during the term of the Notes.
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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 Will Be Less than the Price to the Public — The initial estimated value that will be set forth in the final pricing supplement
relating to the Notes 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 levels of the Reference Indices, the borrowing rate we pay to issue securities of
this kind, and the inclusion in the price to the public of the structuring fee, 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 structuring fee or 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.
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The Initial Estimated Value of the Notes that We Will Provide in the Final Pricing Supplement Will Be an Estimate Only, Calculated as of the Time the Terms of the Notes Are Set —
The initial estimated value of the Notes will be 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 will be 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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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the Reference Indices 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 levels of the Reference Indices, 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 companies included in the Reference Indices, 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 Indices. 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 levels of the Reference Indices, and therefore, the market value of the Notes.
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The Payments on the Notes Are Subject 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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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
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Contingent Coupon Buffer Notes
Linked to the Lesser Performing of Two
Equity Indices Royal Bank of Canada |
P-19
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RBC Capital Markets, LLC
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