Structured Note

A b-sharp seventh. Seems like a pretty heavily structured note to us.

But we're talking finance here. In this contex, a structured note represents a security where the payoff is tied to some underlying equity index, or other similar measure. It's a combination of a bond and a derivative (like an option). The way it's created is relatively complicated, so let the Harvard-educated financial wonks at the bank figure that stuff out. For the purposes of the buyer, it works like this:

You buy a $1,000 structured note. It's tied to the performance of the S&P 500 index. After a set period of time, if the S&P rises, you get a profit. If the S&P declines, you still get your $1,000 back.

So, like a bond, if you hold it to maturity, you can't lose money. However, the bond you're purchasing doesn't actually provide any interest. Fundamentally, its a 0% interest rate bond. In compensation for the free loan, you get the equivalent of an option on the S&P 500 (or whatever index or benchmark the structured note has as its basis). It gives you a way to bet on that equity index, but without the potential downside if it happens to decline.