Zero coupon equity linked note

An expectation of a price drop of a stock soon can encourage an investor to invest in ELN with that stock as the underlying asset. ELN offers the investor greater return than deposit rate, while waiting to invest later.

Hungry for returns? Look at Equity-Linked Notes

Meanwhile, the investor will be able to buy the stock at a lower specified price when its share price drops to the set level. On the other hand, an investor who has already bought a stock can sell the stock at a higher specified price or receive return if the higher price is not reached, by transacting in a RELN.

  • Equity-Linked Note (ELN)?
  • Structured Notes With Principal Protection: Note the Terms of Your Investment |
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Provide returns in the form of a discount or yield. Able to buy a stock at a lower price in the future through ELN. Able to sell a stock at a higher price in the future through RELN. Underlying Asset. Stocks in SET50 Company stocks with high reputation. However, if the stock is trading below the exercise price, the investor receives the stock instead. A principal-guaranteed note PGN is a structured product composed of a zero-coupon bond and a long option , which may be a call option or put option.

The product is principal-protected, i. The product is sold at the face value, where the discount on the zero-coupon bond is used to buy an option. If the underlying product goes in favour of the investor, the option is exercised to create additional return. If the equity remains unchanged or declines, the investor still receives one dollar per dollar invested as long as the issuer does not default. Generally, the participation rate is better in longer maturity notes, since the total amount of interest given up by the investor is higher.

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