Principal-Protected Note - PPN

DEFINITION of 'Principal-Protected Note - PPN'

A fixed-income security that guarantees a minimum return equal to the investor's initial investment (the principal amount).

Also known as "principal-protected products" and "principal-protected securities."

BREAKING DOWN 'Principal-Protected Note - PPN'

These investments are tailored for risk averse investors wishing to protect their investments while participating in gains from favorable market movements.

RELATED TERMS
  1. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
  2. Protected Fund

    A type of mutual fund that guarantees an investor at least the ...
  3. Inflation-Protected Security - ...

    A type of fixed-income investment that guarantees a real rate ...
  4. Prepayment Risk

    The risk associated with the early unscheduled return of principal ...
  5. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  6. Conservative Investing

    An investing strategy that seeks to preserve an investment portfolio's ...
Related Articles
  1. Bonds & Fixed Income

    Principal-Protected Notes: Why Use Them?

    Principal-protected notes are complicated and aren't for amateurs, but they can turn out some upside if used correctly.
  2. Options & Futures

    Principal-Protected Investments: Risks, Fees And Regulations

    Discover if these instruments hit the right note for you.
  3. Investing

    What are Fixed-Income Securities?

    For a fixed-income security, the periodic return on the investment is the same throughout the life of the security. Principal is returned at the time of maturity. The payment can be in the form ...
  4. Investing Basics

    How To Create Capital Protected Investment Using Options? (MSFT)

    Does "Capital-Protection" guarantee in an investment product sound attractive? Wait! Here's how you can create a better one for yourself, at low-cost!
  5. Trading Strategies

    Beginner's Guide to Trading Fixed Income: Introduction

    This Beginner's Guide to Trading Fixed Income will examine the basic structure of the fixed-income market, explain some of the differences between trading fixed income and trading equities, and ...
  6. Brokers

    Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  7. Bonds & Fixed Income

    Advanced Bond Concepts: Introduction

    In their simplest form, bonds are pretty straightforward. After all, just about anyone can comprehend the borrowing and lending of money. However, like many securities, trading and analyzing ...
  8. Trading Strategies

    Beginner's Guide to Trading Fixed Income: Part 3 - Mechanics of trading a fixed-income security

    Part 3 - Mechanics of trading a fixed-income securityNow that we've examined the basic structure of the fixed-income market and some of the challenges facing individual investors, as well as ...
  9. Bonds & Fixed Income

    Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
  10. Retirement

    Retiring On Investment Interest: Can It Be Done?

    Spending investment interest in retirement can be a viable strategy, but it won't work for everyone.
RELATED FAQS
  1. What are the main disadvantages of fixed income securities?

    Learn why fixed-income securities, despite offering the luxury of guaranteed, regular cash payments, confer several disadvantages ... Read Answer >>
  2. How do markets account for systematic risk?

    Find out how market participants deal with systematic risk, or the kind of market risk that cannot be diversified away through ... Read Answer >>
  3. Have hedge funds eroded market opportunities?

    Learn why there is still plenty of opportunity for investors even though hedge funds have grown substantially. Read about ... Read Answer >>
  4. How does a company obtain a bank guarantee?

    Find out how bank guarantees work, why they are issued and the process that a business normally goes through to acquire one ... Read Answer >>
  5. What are the biggest risks of fixed-income investing?

    Learn about the three biggest risks of bonds and other fixed-income investments. Find out more about related issues and learn ... Read Answer >>
  6. How can I calculate the expected return of my portfolio?

    Understand the components of the equation used to calculate the expected return of an investor's portfolio. Learn why the ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center