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Liquid Yield Option Note
A convertible, callable, and putable zero-coupon bond. A LYON is a bond that is convertible to common stock and may be bought or sold as an option, but which does not pay interest. Because it pays no interest, it is issued at a considerable discount from par value of the bond. This guarantees a positive return to the investor, at least until such time as it becomes profitable for the investor to put the bond back to the issuing company for an amount over the issue price. Generally, the total return on a LYON is less than that of the company's common stock, assuming the company does well.