A certificate of deposit (CD) that is linked to the performance of some market variable, specifically the price of a stock or a basket of stocks (stock index, equity index). It ties the rate of return to the price changes of the underlying over the term of the certificate (the term varies but is typically five years).
A typical market-linked CD (MLCD) is basically a combination of zero-coupon bank debt and long-term put or call options on an underlying index.
It is also referred to as an indexed CD, an index-linked CD, a market-indexed CD, or an equity-linked CD.
