Structured note - Financial definition
Concise definition of the term structured note
A structured note is a type of financial product that combines a bond with a derivative, offering investors exposure to underlying assets or indexes while providing customized risk-return profiles.
Comprehensive definition of the term structured note
Structured notes are financial instruments that typically consist of a bond component and a derivative component. The bond component provides fixed income characteristics, such as regular interest payments and a principal repayment at maturity, while the derivative component offers exposure to underlying assets or indexes, such as equities, currencies, or commodities. Structured notes are often tailored to meet specific investor needs, allowing for customization of risk and return profiles through features like principal protection, participation rates, and downside buffers. These notes can be structured in various ways, such as reverse convertibles, autocallables, or range accrual notes, and are commonly issued by financial institutions to retail or institutional investors seeking enhanced yield potential or alternative investment strategies.