Exchange-Traded Note (ETN)
Unsecured bank debt that tracks an index and trades like a stock.
What is Exchange-Traded Note (ETN)?
An ETN is a promise by the issuing bank to pay the return of an index. It owns no underlying assets, so beyond market risk it carries the full credit risk of the issuer. If the issuer fails, holders are unsecured creditors.
Exchange-Traded Note (ETN): a worked example
An ETN tracking a commodity index can lose value from an issuer downgrade even when commodities rise.
What is the difference between Exchange-Traded Note (ETN) and Exchange-Traded Fund (ETF)?
An ETF owns a basket of assets held for shareholders. An ETN owns nothing - it is an unsecured IOU from the issuer.
Often confused with Exchange-Traded Fund (ETF) - see Exchange-Traded Note (ETN) vs Exchange-Traded Fund (ETF) side by side.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.