Index-Linked Certificate Of Deposit

DEFINITION of 'Index-Linked Certificate Of Deposit'

A certificate of deposit (CD) with a return based on a specific index. These CDs are purchased for a fixed price. There is a chance for a high return, depending on the outcome of the index, and there is no risk of a loss as the CD is FDIC insured.

BREAKING DOWN 'Index-Linked Certificate Of Deposit'

While these CDs offer a potentially higher return than many other variations, they are not the safest investment. Even though the initial investment will never be lost, there may be no return on the index. If you are looking for guaranteed future income, a traditional CD may be a better choice for you.

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RELATED FAQS
  1. What is considered a good interest rate for a certificate of deposit (CD)?

    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for ... Read Answer >>
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  3. What are the typical durations for a certificate of deposit?

    Investing in a certificate of deposit offers individuals the ability to earn interest on idle funds with less risk than stock ... Read Answer >>
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    Both individual retirement accounts (IRA) and certificates of deposit (CD) are useful savings instruments, but they have ... Read Answer >>
  5. Are all bank accounts insured by the FDIC?

    The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against ... Read Answer >>
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    There is a fair amount of overlap between certificates of deposit (CDs) and bonds; they are both fixed-income securities, ... Read Answer >>
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