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An equity-linked note (ELN) is a debt instrument, usually a bond issued by a financial institution such as an investment bank or a subsidiary of a commercial bank. ELNs are liabilities of the issuer, but the final payout to the investor is based on an unrelated company's stock price, a stock index or a group of stocks or stock indices. The underlying stocks typically have large market capitalizations. Equity-linked notes are a type of structured product and are often marketed to unsophisticated retail investors.[1]
Equity-linked notes come in various forms, including the following.[2]
- ^ Henderson, Brian; Pearson, Neil D; and Wang, Li (August 2023). "Retail Derivatives and Sentiment: A Sentiment Measure Constructed from Issuances of Retail Structured Equity Products". The Journal of Finance. 78 (5): 2365–2367.
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