Liquid Yield Option Note (LYON)

A zero coupon convertible, callable (by the issuer), puttable (by the investor) bond issued by a corporation. The combination of LYON features usually assures that an investor will earn a positive return-at least until the expiration of the last opportunity to put the security back to the issuer at a premium over the issue price. The total return, if the company prospers and the common stock performs well, will be less than the return earned by common shareholders. The payout pattern of a LYON is roughly similar to some types of equity-linked notes. See also Zero Coupon Convertible Debt, Convertible Bond With a Premium Put, Synthetic Zero Coupon Convertible Bond.

Glossary * L