A type of equity derivative; it is a structured convertible security (equity-linked note– ELN) issued by Lehman Brothers. It was subject to a limited upside potential: it provides its holder with an enhanced dividend, capped return modeled on the so-called preference equity redemption cumulative stock (PERCs).
However, YEELDs (also Yield), are a specific type of ELKs. By definition, ELKs were issued by a third party (e.g., a financial intermediary, brokerage, etc), while PERCs were typically issued by the same company that issued the underlying instrument.
YEELDs are debt whose principal is payable at maturity date based on the performance of a specific equity/ stock to which it was linked.
YEELDs are structured synthetic PERCs.
