Certificate Of Deposit Index - CODI Index

AAA

DEFINITION of 'Certificate Of Deposit Index - CODI Index'

The 12-month average of the most recently published dealer bid rates (yields) on nationally traded three-month certificates of deposit as reported in the H.15 Federal Reserve Statistical Release. The yields are annualized using a 360-day year. For purposes of determining CODI, "published" means first made available to the public by the Federal Reserve Board. The CODI index is calculated on or near the first Monday of each calendar month and is often used for adjustable rate mortgages.

INVESTOPEDIA EXPLAINS 'Certificate Of Deposit Index - CODI Index'

Because the CODI index is a 12-month moving average, it is not as volatile as some other popular mortgage indexes such as the one-month LIBOR index. It tends to lag other mortgage indexes in the rate at which it adjusts when interest rates change.

Some mortgages, such as payment option ARMs, offer the borrower a choice of indexes. This choice should be made with some analysis. The interest rate on an adjustable-rate mortgage is known as the fully indexed interest rate - it equals the index value plus the margin. While the index is variable, the margin is fixed for the life of the mortgage. When considering which index is most economical, don't forget about the margin. The lower an index is relative to another index, the higher the margin is likely to be.

RELATED TERMS
  1. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  4. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  5. Payment Option ARM

    A monthly adjusting adjustable-rate mortgage (ARM) which allows ...
  6. Treasury Direct

    The online market where investors can purchase federal government ...
Related Articles
  1. ARMed And Dangerous
    Insurance

    ARMed And Dangerous

  2. Mortgages: Fixed-Rate Versus Adjustable-Rate
    Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

  3. Option ARMs: American Dream Or Mortgage ...
    Home & Auto

    Option ARMs: American Dream Or Mortgage ...

  4. 7 Misconceptions About The Federal Reserve
    Economics

    7 Misconceptions About The Federal Reserve

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center