Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-259205
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Pricing Supplement
Dated January 26, 2023
To the Product Prospectus Supplement ERN-EI-1, Prospectus
Supplement and Prospectus, Each Dated September 14, 2021
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Buffered Enhanced Return Notes
Each Linked to a Different Index,
Due February 29, 2024
Royal Bank of Canada
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Reference Asset and Symbol
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CUSIP
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Initial
Level
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Buffer Level (90%
of the Initial Level)*
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Maximum
Redemption Amount
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Initial Estimated Value (per $1,000
in principal amount)
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S&P 500® Index (SPX)
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78016HKQ2
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4,060.43
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3,654.39
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114%
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$989.19
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Russell 2000® Index (RTY)
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78016HKS8
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1,903.064
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1,712.758
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116.50%
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$989.02
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Each of the Notes provides a 200% leveraged positive return if the Final Level of the applicable Reference Asset is greater than its Initial Level, up to the applicable Maximum Redemption Amount (to be determined on the Trade Date)
per $1,000 in principal amount.
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If the Final Level of the applicable Reference Asset is less than or equal to its Initial Level, but is greater than or equal to its Buffer Level, investors will receive the principal amount at maturity.
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If the Final Level of the applicable Reference Asset is less than its Buffer Level, investors will lose 1% of the principal amount of the applicable Notes for each 1% that the applicable Final Level has decreased by more than 10%
from its Initial Level.
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Any payments on the Notes are subject to our credit risk.
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The Notes do not pay interest.
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The Notes will not be listed on any securities exchange.
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Per SPX Note
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Total
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Per RTY Note
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Total
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Price to public(1)
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100.00%
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$2,026,000
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100.00%
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$631,000
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Underwriting discounts and commissions(1)
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1.50%
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$30,390
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1.50%
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$9,465
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Proceeds to Royal Bank of Canada
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98.50%
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$1,995,610
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98.50%
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$621,535
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Underwriter:
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RBC Capital Markets, LLC (“RBCCM”)
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Reference Assets:
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As set forth on the cover page.
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Minimum
Investment:
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$1,000 and minimum denominations of $1,000 in excess thereof
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Trade Date (Pricing
Date):
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January 26, 2023
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Issue Date:
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January 31, 2023
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Valuation Date:
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February 26, 2024
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Maturity Date:
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February 29, 2024, subject to extension for market and other disruptions, as described in the product prospectus supplement dated September 14, 2021.
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Payment at Maturity
(if held to maturity):
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If the Percentage Change for the applicable Notes is positive, then the investor will receive an amount per $1,000 principal
amount per Note equal to the lesser of:
1. Principal Amount + [Principal Amount x (Percentage Change x Leverage Factor)] and
2. the Maximum Redemption Amount
If the Percentage Change for the applicable Notes is less than or equal to 0%, but not by more than the Buffer Percentage (that is, the Percentage Change is between 0% and
-10%), then the investor will receive the principal amount only.
If the Percentage Change for the applicable Notes is negative, by more than the Buffer
Percentage (that is, the Percentage Change is between -10.01% and -100%), then the investor will receive a cash payment equal to:
Principal Amount + [Principal Amount x (Percentage Change + Buffer Percentage)]
You could lose a substantial portion of the principal amount if the Final Level for the applicable Notes is less than the Initial Level by more than the Buffer Percentage.
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Percentage Change:
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The Percentage Change for the applicable Reference Asset, expressed as a percentage, is calculated using the following formula:
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Maximum
Redemption
Amount:
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A percentage of the principal amount, as set forth on the cover page of this document.
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Initial Level:
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The closing level of the applicable Reference Asset on the Trade Date, as set forth on the cover page of this pricing supplement.
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Final Level:
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The closing level of the applicable Reference Asset on the Valuation Date.
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Leverage Factor:
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200%
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffer Percentage:
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10%
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Buffer Level:
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90% of the Initial Level of the applicable Reference Asset, as set forth on the cover page of this pricing supplement.
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Principal at Risk:
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The Notes are NOT principal protected. You may lose a substantial portion of your principal amount at maturity
if the applicable Final Level is less than the Buffer Level of the applicable Reference Asset.
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Calculation Agent:
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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 applicable Notes as a pre-paid
cash-settled derivative contract 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 each of 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 of your Notes.
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Listing:
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The Notes will not be listed on any securities exchange.
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Clearance and
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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As to each of the Notes, all of the applicable 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
captions “General Terms of the Notes” and “Supplemental Discussion of U.S. Federal Income Tax Consequences” in the product prospectus supplement dated September 14, 2021, as modified by this pricing supplement.
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Example 1 —
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Calculation of the Payment at Maturity where the Percentage Change is positive.
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Percentage Change:
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2%
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Payment at Maturity:
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$1,000 + [$1,000 x (2% x 200%)] = $1,000 + $40 = $1,040
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On a $1,000 investment, a 2% Percentage Change results in a Payment at Maturity of $1,040, a 4% return on the Notes.
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Example 2 —
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Calculation of the Payment at Maturity where the Percentage Change is positive (and the Payment at Maturity is subject to the Maximum Redemption Amount).
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Percentage Change:
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10%
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Payment at Maturity:
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$1,000 + [$1,000 x (10% x 200%)] = $1,000 + $200 = $1,200
However, the hypothetical Maximum Redemption Amount is $1,150 per $1,000 in principal amount.
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On a $1,000 investment, a 10% Percentage Change results in a Payment at Maturity of $1,150, a 15% return on the Notes.
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Example 3 —
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Calculation of the Payment at Maturity where the Percentage Change is negative (but not by more than the Buffer Percentage).
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Percentage Change:
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-8%
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Payment at Maturity:
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At maturity, if the Percentage Change is negative BUT not by more than the Buffer Percentage, then the Payment at Maturity will equal the principal amount.
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On a $1,000 investment, a -8% Percentage Change results in a Payment at Maturity of $1,000, a 0% return on the Notes.
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Example 4 —
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Calculation of the Payment at Maturity where the Percentage Change is negative (by more than the Buffer Percentage).
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Percentage Change:
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-35%
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Payment at Maturity:
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$1,000 + [$1,000 x (-35% + 10%)] = $1,000 - $250 = $750
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On a $1,000 investment, a -35% Percentage Change results in a Payment at Maturity of $750, a -25% return on the Notes.
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Hypothetical Percentage
Change
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Redemption Amount as
Percentage of Principal Amount
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Redemption Amount
per $1,000 in Principal
Amount
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40.00%
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115.00%
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$1,150.00
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30.00%
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115.00%
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$1,150.00
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20.00%
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115.00%
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$1,150.00
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10.00%
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115.00%
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$1,150.00
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7.50%
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115.00%
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$1,150.00
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5.00%
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110.00%
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$1,100.00
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2.00%
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104.00%
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$1,040.00
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0.00%
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100.00%
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$1,000.00
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-5.00%
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100.00%
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$1,000.00
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-10.00%
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100.00%
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$1,000.00
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-20.00%
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90.00%
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$900.00
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-30.00%
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80.00%
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$800.00
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-40.00%
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70.00%
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$700.00
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-50.00%
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60.00%
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$600.00
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-60.00%
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50.00%
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$500.00
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-70.00%
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40.00%
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$400.00
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-80.00%
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30.00%
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$300.00
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-90.00%
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20.00%
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$200.00
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-100.00%
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10.00%
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$100.00
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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You May Receive Less Than the Principal Amount at Maturity — Investors in each of the Notes could lose a substantial portion of
their principal amount if there is a decline in the level of the applicable Reference Asset. You will lose 1% of the principal amount of your Notes for each 1% that the applicable Final Level is less than the applicable Initial Level by
more than 10%.
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The Notes Do Not Pay Interest and Your Return May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity —
There will be no periodic interest payments on the Notes as there would be on a conventional fixed-rate or floating-rate debt security having the same 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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Your Potential Payment at Maturity Is Limited — The Notes will provide less opportunity to participate in the appreciation of the applicable Reference Asset than an
investment in a security linked to that Reference Asset providing full participation in the appreciation, because the payment at maturity will not exceed the applicable Maximum Redemption Amount. Accordingly, your return on the Notes
may be less than your return would be if you made an investment in a security directly linked to the positive performance of the applicable Reference Asset.
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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 the applicable amount due on the maturity date for your Notes is dependent upon our ability to repay our obligations at that time. This
will be the case even if the level of the applicable Reference Asset increases after the Trade Date. No assurance can be given as to what our financial condition will be at the maturity 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 one or both of the Notes; however, they are not required to do so. RBCCM
or any of our other affiliates may stop any market-making activities at any time. Even if a secondary market for either of 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 of each of the Notes
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 level of the applicable Reference
Asset, the borrowing rate we pay to issue securities of this kind, and the inclusion in
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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The Initial Estimated Value of the Notes that Is Set Forth 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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Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the applicable Reference Asset 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 level of the applicable Reference
Asset, 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 applicable Reference Asset, 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 one or both of the Reference Assets. 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 applicable Notes. Any of these activities by us or one or more of our affiliates may affect the level of one
or both of the Reference Assets, and, therefore, the market value of the applicable Notes.
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You Will Not Have Any Rights to the Securities Included in the Applicable Reference Asset — As a holder of the Notes, you will
not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of securities included in the applicable Reference Asset would have. The Final Level for your Notes will not reflect any
dividends paid on the securities included in the applicable Reference Asset, and accordingly, any positive return on either of the Notes may be less than the potential positive return on those securities.
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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The Payments on the Notes Are Subject to Postponement Due to Market Disruption Events and Adjustments — The payment at maturity
and the Valuation Date for each of the Notes 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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An Investment in the Notes Linked to the RTY Is Subject to Risks Associated in Investing in Stocks With a Small Market Capitalization — The RTY Index consists of
stocks issued by companies with relatively small market capitalizations. These companies often have greater stock price volatility, lower trading volume and less liquidity than large-capitalization companies. As a result, the level of
the RTY may be more volatile than that of a market measure that does not track solely small-capitalization stocks. Stock prices of small-capitalization companies are also generally more vulnerable than those of large-capitalization
companies to adverse business and economic developments, and the stocks of small-capitalization companies may be thinly traded, and be less attractive to many investors if they do not pay dividends. In addition, small capitalization
companies are often less well-established and less stable financially than large-capitalization companies and may depend on a small number of key personnel, making them more vulnerable to loss of those individuals. Small capitalization
companies tend to have lower revenues, less diverse product lines, smaller shares of their target markets, fewer financial resources and fewer competitive strengths than large-capitalization companies. These companies may also be more
susceptible to adverse developments related to their products or services.
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
|
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
|
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
|
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Buffered Enhanced Return Notes
Each
Linked to a Different Equity Index
|