Accelerated Return Note (ARN)

Think about an ARN like it's a bond that converts into an index fund. Or rather, it has the option to convert into an index fund if the bond holder wants it to. In essence, a buyer of the bond risks losing, say, a third of the bond's value in return for the option of potentially participating in a big, fat, bull market rise in the stock market. Basically, ARNs are just bonds that are convertible with a little bit of spice. They come in all kinds of flavors and covenants, and only exist in a world of anemic bond returns, like that of the modern era. They are not for the faint of heart.