Indexed (Equity-Indexed) Annuity
A guaranteed minimum plus credits linked to an index, with caps.
What is Indexed (Equity-Indexed) Annuity?
Credits interest based on an index's performance, limited by a cap and a participation rate, while guaranteeing a minimum return. Generally regulated as insurance rather than as a security. Complexity, long surrender periods, and caps are the usual suitability concerns.
Indexed (Equity-Indexed) Annuity: a worked example
Index up 12% with a 6% cap: the owner is credited 6%. Index down 15%: credited 0%.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.