These have as their underlying tracking instrument a stock or other equity, but are created to resemble a bond more than a stock. Their principle attraction is the provision that their downside risk is limited by the issuer while the investor may still participate in some upside growth. Most often the investor is guaranteed the return of principal by the issuer in return for giving up part of the upside growth in the stock if the Equity Note is held to maturity. They are often callable like a bond and have a defined maturity date. Their return is usually calculated using a formula based upon the rise in the underlying stock.

Why Investors Care

Investors choose these very specialized investments when they are willing to limit their rewards for the guarantee of little or no downside risk. These investments provide them very low risk with some potential for limited upside growth in the underlying stock. Investors choose these over Index Notes when they wish to gain greater potential for upside return, understanding that there is also greater volatility, with the possibility that their return may be less than an Index Note.

Structured Products Equity Notes

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As of 11/20/2009 Market Closed