| These indexes are
averages of the secondary market interest rates on nationally traded
Certificates of Deposit. The Certificates of Deposit, also known as
CDs, are usually issued by banks and other financial institutions.
They pay a fixed rate of interest for a specific period of time.
The Certificates of Deposit of
various maturities, including 1-Month, 3-Month, 6-Month and 1-Year,
are used as ARM indexes. The 6-Month Certificate of Deposit (6-Mo
CD) is the most popular of the CD indexes.
The CD indexes are very volatile and
generally considered to react quickly to change in the market, which
is good for you if rates are falling but not good for you if rates
are rising. Look at how the 6-Month CD changes: |
