Index-Linked Certificate Of Deposit

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  2. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  3. National Credit Union Administration ...

    An agency of the United States federal government that was created ...
  4. Certificate Of Deposit Index - ...

    The 12-month average of the most recently published dealer bid ...
  5. Callable Certificate Of Deposit

    An FDIC insured certificate of deposit (CD) that contains a call ...
  6. Canadian Depository For Securities ...

    Canada's national securities depository, clearing and settlement ...
Related Articles
  1. Certificates Of Deposit
    Bonds & Fixed Income

    Certificates Of Deposit

  2. An Introduction To Stock Market Indexes
    Investing Basics

    An Introduction To Stock Market Indexes

  3. S&P 500 ETFs: Market Weight Vs. Equal ...
    Mutual Funds & ETFs

    S&P 500 ETFs: Market Weight Vs. Equal ...

  4. How To Create A Laddered CD Portfolio
    Insurance

    How To Create A Laddered CD Portfolio

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center