One of my family members is being given a sizeable amount of money to invest but the stipulation is that it has to be invested in one of a few choices of CD. Some of them are normal CDs. Some of them are Absolute Return CDs. I've never heard of this before. Basically it works like this: One is an S&P500 CD with a range of 16-18%. If at any point during 1 year from the day you invest, the S&P500 closes between 16 and 18% up from the original purchase date, you lose all your interest and you only get back your initial investment (altho you have to wait until the completion of the year to get your money back). Other than that, if it closes up or down any amount, you get the absolute value of that amount. So if it closes up 10% at the end, you get 10%. If it goes down 10%, you still get 10% interest. But if it closes up 16-18%, you get nothing back other than your original investment. I can't help but think that's not a good idea. At first it sounds like you're hedged against a declining market, but I bet quants came up with some algorithm to generate the 16-18% value such that the company actually makes money over time. If they thought the market was going to go down, they wouldn't offer this, because if it goes down 10% they would have to still pay people 10% interest. So is this a sham or a decent idea?