Contract Value
See book value.
Effective Annual Yield
The compound yield associated with a periodic interest rate based on the frequency of interest payments per year. As an example, if the annual interest rate is 3%, interest is credited semi-annually and the periodic interest rate is 1.5%, then the effective annual yield is 3.02%, calculated as follows:(1.015 x 1.015)-1= 3.02%. (See also crediting rate.)
General Account GIC
See traditional GIC.
Lesser of Book and Market Withdrawal
A type of plan-initiated withdrawal for plans departing certain commingled funds or insurance company stable value investment options that allow the departing plan to withdraw its investment at either the book value of the investment contract (or stable value investment option) or the market value of the associated assets supporting the book value of the investment contract (or stable value investment option), whichever is lower.
Non-Participating
A characteristic of certain investment contracts, such as a traditional GIC, such that the contract’s crediting rate is not affected by the contract’s cash flow experience or the performance of the associated assets.
Qualified Withdrawals
See book value withdrawals.
Standard & Poor’s Ratings Service
See NRSRO. Click here for official website.
Wrap Contract
A stable value investment contract that “wraps” a designated portfolio of associated assets within a stable value investment option to provide an assurance (1) of principal and accumulated interest for that portfolio, (2) of payment of an interest rate, which will not be less than 0%, for a specified period of time (the crediting rate) on that portfolio, and (3) that participant-initiated withdrawals and transfers out of the assets […]
Book Value Adjustment
The adjustment to an investment contract’s book value in accordance with agreed-to contract terms resulting from events such as: withdrawals in excess of the contract’s corridor limits, if any, employer-initiated events, impaired securities, or market value events.