An Equity-Linked Note (ELN) is a financial instrument that combines features of both fixed-income securities and equity investments. ELNs are structured debt instruments where the returns are linked to the performance of an underlying equity security, a basket of stocks, an index, or another reference asset. These notes offer investors the opportunity to participate in the potential upside of the equity market while providing some downside protection.

Key features of Equity-Linked Notes include:

1. **Structure:** ELNs are structured as bonds or notes, and they pay periodic interest like traditional fixed-income securities. However, the principal or final payout is linked to the performance of an underlying equity or market index.

2. **Underlying Asset:** The performance of ELNs is tied to an underlying asset, such as individual stocks, a stock index (e.g., S&P 500), a basket of stocks, or another financial instrument. The return on the ELN is determined by the price movement of the underlying asset.

3. **Coupon Payments:** ELNs typically pay periodic coupon or interest payments during the life of the note. The coupon rate may be fixed, floating, or determined by a formula based on the performance of the underlying asset.

4. **Principal Protection:** Some ELNs come with a level of principal protection, which means that the investor is guaranteed to receive at least a portion of their initial investment at maturity, even if the underlying asset performs poorly. The level of principal protection varies among different ELNs.

5. **Maturity Date:** ELNs have a specified maturity date at which the investor receives the final payout, which is based on the performance of the underlying asset. The maturity date is predetermined at the time of issuance.

6. **Participation Rate:** The participation rate determines how much of the positive performance of the underlying asset is passed on to the investor. It is expressed as a percentage, and a lower participation rate means that the investor captures a smaller percentage of the upside.

7. **Risks:** ELNs carry certain risks, including market risk associated with the performance of the underlying asset. If the underlying asset performs poorly, the investor may not receive the full principal at maturity. Additionally, the level of principal protection may not cover the entire investment.

8. **Liquidity:** The liquidity of ELNs can vary, and investors may face challenges in selling or trading these instruments in the secondary market, especially if they are not actively traded.

Equity-Linked Notes are complex financial instruments, and investors should carefully consider the terms and risks associated with each specific ELN before investing. Due to their complexity, ELNs are often used by institutional investors and sophisticated individuals who are comfortable with the associated risks and complexities. It’s advisable for investors to seek advice from financial professionals before investing in ELNs.