DEFINITION of 'Bank Investment Contract - BIC'

A security or portfolio of securities that offers a guaranteed rate of return. As the name implies, the guaranteed rate in a Bank Investment Contract is ensured by the bank for a predetermined length of time, usually one to 10 years. A bank investment contract (BIC) is typically a low-risk, low-yield investment suited to those looking to preserve rather than grow their wealth.


Sometimes called a bank deposit agreement.

BREAKING DOWN 'Bank Investment Contract - BIC'

BICs are similar to guaranteed investment contracts (GICs), which are issued by insurance companies. The primary disadvantage of all such contracts is that they are very illiquid, given that they generally require the money invested to stay put for the length of the contract. On the plus side, unlike certificates of deposit (CDs), BICs allow one to invest incrementally and when subsequent deposits are allowed, they receive the guaranteed rate as well.

RELATED TERMS
  1. Guaranteed Investment Contract ...

    Insurance contracts that guarantee the owner principal repayment ...
  2. Window Guaranteed Investment Contract ...

    A type of investment plan where a series of payments are made ...
  3. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific ...
  4. Guaranteed Investment (Interest) ...

    A deposit investment security sold by Canadian banks and trust ...
  5. Cash Contract

    A financial arrangement that requires delivery of a particular ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities ...
Related Articles
  1. Financial Advisor

    The Best Interest Contract Exemption to the Fiduciary Rule

    Here is how the Best Interest Contract works and when it is needed under the new fiduciary rule.
  2. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  3. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  4. Financial Advisor

    Build Your Own Annuity

    Here are some tips on the different types of annuities to have in your portfolio.
  5. Financial Advisor

    When Does It Make Sense to Buy an Annuity?

    Annuities are not always appropriate for every situation. Here is when it makes sense to purchase them.
  6. Investing

    How to Trade Futures Contracts

    Futures is short for Futures Contracts, which are contracts between a buyer and seller of an asset who agree to exchange goods and money at a future date, but at a price and quantity determined ...
  7. Retirement

    The Cost Of Variable Annuity Guarantees

    These products tempt investors with some impressive benefits - but they come at a price.
RELATED FAQS
  1. 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 >>
  2. What is the difference between forward and futures contracts?

    Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell ... Read Answer >>
  3. How can a futures trader exit a position prior to expiration?

    A futures contract is an agreement to buy or sell a commodity at a pre-determined price and quantity at a future date in ... Read Answer >>
  4. What's the difference between a bank guarantee and a letter of credit?

    Letters of credit ensure that a transaction proceeds as planned, while bank guarantees reduce the loss if the transaction ... Read Answer >>
  5. What is the difference between a bank guarantee and a bond?

    Understand what a bank guarantee is and what a bond is, and which one is a debt instrument. Learn the differences between ... Read Answer >>
Hot Definitions
  1. Book Value

    1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated ...
  2. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends each year relative to its share price.
  3. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. ...
  4. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  5. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  6. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
Trading Center