What is an index-linked certificate of deposit (CD)?
Index-linked CDs are similar to traditional Certificate of Deposit, but they allow the investor to participate in the appreciation, if any, of a particular stock index (like S&P 500), during the term of the CD.
An index-linked CD is a deposit obligation of the issuing bank and is often sold through bank branches and by both affiliated and unaffiliated brokers. Index-linked CDs may have complicated payout structures and may not be appropriate for all investors. Investors should carefully review the CD terms and investment risk considerations detailed in the relevant offering documents and disclosure statements.
Common names for index-linked CDs include market-linked CDs, equity-linked CDs, and market participation CDs.
Last Reviewed: October 2020
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