Equity-Linked Note

Equity-linked note - An equity-linked note is a promise to repay a debt (debt instrument) such as bills, bonds, notes etc.) The equity-linked will be determined by the performance of an individual underlying security, several securities (basket) or an equity index. When the note is linked to an equity index it is called an equity index-linked note. The securities which have equity-linked notes are protected against negative movement of the security. Securities coming with an equity-linked note usually guarantee a minimum redemption value (at par value). The investor would get one hundred percent of the original investment at maturity but would not get any interest that accrued over the years. The investor will however make a gain if the securities have moved upward.