A range accrual note (RAN)- a principal-protected note– that that pays out a series of coupons (interest amounts) based on the performance of an underlying equity (e.g., a stock, index, or basket of equity holdings, etc.) The coupons are paid to the note-holder on a set of scheduled payment dates (observation dates), only on the condition that the value of the underlying equity on a respective date falls within the defined range (a lower and upper bound). In this sense, the coupons are equivalent to a series of digital options that pay a certain fixed amount when the underlying price/ rate falls within the defined range.

At each observation date, a coupon will accrue as part of the total accrued coupon corresponding to the respective period. On a coupon determination date, the total accrued coupon will be paid, and new accrual (from zero) will commence for the next period.