|
C - When the fifth letter of a NASDAQ stock symbol is a
C, the stock is temporarily exempt from listing requirements.
Cabinet Trade - A transaction in an inactive stock or bond.
Cable - The listed exchange rate between US dollars and British pounds.
Cage - Cashiering area in a brokerage.
Calamity Clause - A provision in a Collateralized Mortgage Obligation
that allows the issuer to pay some obligations out of principal if the
reinvestment rate on principal during the interest period is below the
bond coupon rate.
Calculation Agent - The party that calculates the amounts payable under
a swap agreement or the value of a derivative instrument.
Calendar - A listing of new issues scheduled to come to market in the
near future.
Call - A call option gives the holder the right to buy an underlying
futures contract, an action where a firm redeems a security before the
maturity date.
Call An Option - The act of exercising a call option.
Call Date - A date when the issuer of a bond may retire that bond in
part for a specified call price, specified at issuance.
Call Feature - Feature of a security that allows the issuer to
repurchase at a certain point in time and price.
Call Loan - A collateralized loan that can be called by the lender at
will.
Call Loan Rate - The interest rate on short-term secured loans that can
be called.
Call Money Rate - The interest rate that banks charge brokers for the
finance of margin loans. The investor generally pays the call money rate
in addition to a service charge.
Call Option - An option contract giving the holder the right to purchase
a specified number of shares of a stock at a given price if the holder
chooses to. The older must purchase on or before the contract’s
expiration date.
Call Premium - Price above the par value of a share of preferred stock
or bond, a premium that must be paid to holders in order to redeem the
stock or bond before its maturity date.
Call Price - A price, specified at issuance, at which the issuer may
retire a portion of the bond at the date specified.
Call Protection - Conditions in a bond or preferred stock which allocate
a time period that the issuer cannot call an issue.
Call Provision - An embedded option which gives the bond issuer the
right to buy back the issue in part, or in entirety, prior to maturity.
Call Risk - The uncertainty of cash flow coupled with reinvestment risk
introduced by a call provision.
Call Spread - A spread of long and short positions in at least two
different calls on the same underlying stock that partially offset.
Call-Adjusted Yield - Equal to the yield to maturity less the expected
opportunity loss as a result of an issuer’s call.
Callable - Refers to convertible securities. A security that is
redeemable by the issuer prior to the previously stated maturity date.
These securities are callable at a stated price and under specific
conditions.
Callable Option - A long option subject to a short call retained by the
issuer of the long option to limit the holder's profit.
Callable Step-Up Note - A callable debt issue that features one or more
increases in a fixed rate during the life of the note.
Callable Swap - A swap contract in which the fixed rate payer can
terminate the contract when interest rates decline to a predetermined
level.
Called Away - The removal of an underlying security position through the
exercise of a call option.
Called Bond - A bond that the debtor declares due and payable on a
certain date prior to maturity. Called bonds earns no interest after the
payable date.
Cambism - Any system used to determine the most cost effective method of
satisfying an obligation in a foreign currency.
Canadian Agencies - Agency banks established in the U.S. by Canadian
Banks.
Canadian Dealing Network - Formerly known at the Canadian Over-the-
Counter Automated Trading System, the organized OTC market of Canada.
Canadian Exchange Group (CEG) - The association between the Montreal
Exchange, the Winnipeg Stock Exchange, the Vancouver Stock Exchange, the
Alberta Stock Exchange, and the Toronto Stock Exchange. The CEG provides
market data to customers outside of Canada.
Cancel - A term used in regard to general equities. The act of voiding
an order to buy or sell.
Cancelable Swap - Swap in which one party has the right to cancel a swap
under certain circumstances.
Cancellation of a Swap - Early termination of a swap agreement with
payment by one counterparty to the other of an amount equal to the net
present value of the swap.
Cap - The upper limit on the interest rate of an adjustable mortgage or
floating rate note.
Capital - Money used to invest in a company.
Capital Allocation Decision - Allocation of funds invested between risk
free assets and higher risk assets.
Capital Asset Pricing Model (CAPM) - An economic theory stating that the
only risk by knowledgeable investors is systematic risk, a theory
describing the relationship between risk and expected return.
Capital Budget - A company’s budget for planned capital expenditures
over a given period of time.
Capital Expenditures - Money spent to acquire or improve long term
assets such as buildings and equipment.
Capital Flight - When capital is transferred abroad due to political
risk or unrest.
Capital Gain - The profit from the sale of a stock. Conversely, if the
stock is sold at a loss, the term "capital loss" applies.
Capital Gains Yield - The price change of a stock return.
Capital lease - A financial lease obligation that is capitalized on the
balance sheet.
Capital Loss - The amount lost in the sale of a security if it is indeed
sold at a loss.
Capital Market - The market for trading debt instruments that mature in
one year or longer.
Capital Market Efficiency - A measure of the relative amount of wealth
wasted during the making of transactions.
Capital Market Line - A term used to represent the relationship between
the risk and extra premium of a particular asset or portfolio.
Capital Rationing - Limiting the amount of new investment for a firm in
a particular spending category.
Capital Stock - Stock authorized by a firm’s charter and having one of
the following values: par value, stated value, or no par value.
Capital Structure - The combination of stockholders’ equity and
liabilities on the balance sheet, particularly, the ratio of debt to
equity and short versus long maturities.
Capital Surplus - Any directly contributed capital in excess of the par
value.
Capitalization - The combination of equity and debt that funds a firm’s
assets.
Capitalization Method - A method of creating a portfolio that replicates
the stock index. The portfolio manager purchases a number of the largest
capitalized stocks in proportion to their capitalization.
Capitalization Ratios - Ratios used to figure to what extent a company
is trading on its equity, comparing debt to total capitalization.
Capitalization Table - A table used to show a firms’ capitalization,
usually showing the amount of capital obtained from different sources.
Capitalized - Recorded as assets including depreciation or amortization,
as appropriate. This is done with items that have a useful life of
greater than one year.
Capitalized interest - Interest that is amortized on the income
statement over time rather that being expensed immediately.
Capped-style option - A capped option is an option with an established
profit cap or cap price. The cap price is equal to the option’s strike
price plus a cap interval for a call option or the strike price minus a
cap interval for a put option. A capped option is automatically
exercised when the underlying security closes at or above (for a call)
or at or below (for a put) the option’s cap price.
Car - A slang term used to describe the amount of a commodity underlying
one contract.This term originated from the fact that quantities of the
product in a contract used to correspond closely to the capacity of one
railroad car.
CAR (Certificates of Automobile Receivables) - Securities backed by
automobile receivables.
CARD- (Certificates of Amortized Revolving Debt) - Securities backed by
credit card receivables.
Carry Forward - An asset created from tax losses incurred in prior years
used in future periods to offset taxable income.
Carrying Costs - Costs that increase as the level of investment in
current assets increases.
Carrying value - A value equal to the current book value.
Cash - A company’s value of assets that can be converted into cash
immediately.This generally includes bank accounts and marketable
securities.
Cash And Equivalents - Assets that can be converted into cash
immediately. Generally includes bank accounts and marketable securities
including government bonds and securities that mature within 90 days.
Cash Basis Accounting - A method of accounting where all transactions
are posted for the amount of cash exchanged rather than for accruing
income and expenses.
Cash Budget - A firm’s budget or forecast of expected cash
inflow/outflow and its expected cash and loan balances.
Cash Commodity - As opposed to a futures contract, the actual physical
commodity.
Cash Conversion Cycle - The period of time between a company’s inventory
purchase and the receipt of cash from its receivables.
Cash Cow - A company or division of a company that generates a
significant and reliable cash flow, or a company whose earnings per
share are largely given to the stockholders as dividends.
Cash Cycle - The period of time between cash disbursement and cash
collection.
Cash Deficiency Agreement - An agreement to invest cash in a project as
required to cover any cash deficiency.
Cash Delivery - The provision of some futures contracts that requires
settlement according to the cash value of the asset rather than delivery
of underlying assets.
Cash Discount - A discounted price offered as an incentive to purchase a
product for payment within a specified period of time, often ten days.
Cash Dividend - A dividend paid to shareholders in cash, normally based
on profitability.
Cash Equivalent - A short-term security that can be liquidated
immediately and therefore could be considered the equivalent of cash.
Cash Flow - Cash earnings or earnings before depreciation, amortization
and non-cash charges.
Cash Flow Coverage Ratio - Ratio showing the number of times that
financial obligations are covered by earnings before taxes,
depreciation, interest, and rental payments.
Cash Flow From Operations - A company’s net cash inflow resulting from
ordinary operations, not including unusual items such as the sale of
equipment, etc.
Cash Flow Per Common Share - Cash flow generated by operations less
preferred stock dividends and then divided by the number of common
shares outstanding.
Cash Management Bill - Very short-term maturity Treasury bills that are
occasionally sold when the Treasury’s cash balances are low.
Cash Markets - Markets that involve the delivery of a security or
instrument immediately, often called "spot markets".
Cash Offer - As opposed to an exchange offer, a proposal to acquire a
company through cash payment for its stock.
Cash Ratio - Ratio measuring the proportion of a firm’s assets that are
held as cash versus non-cash assets.
Cash Sale/Settlement - Transaction in which cash is exchanged in order
to fulfill a contract on the same day as the trade date.
Cash Settlement Contracts - Futures contracts that settle for cash
rather than the delivery of the underlying.
Cash Surrender Value - The amount an insurance company pays in the event
that the policyholder ends a whole life policy.
Cash Transaction - As opposed to a forward contract, a transaction where
exchange is immediate.
Cash-flow Break-even Point - An amount of cash flow a company needs to
generate in order to meet its fixed costs.
Cashout - A term used when a firm is out of cash and cannot quickly sell
marketable securities.
CBOE - Abbreviation for the Chicago Board Options Exchange.
CD - Abbreviation meaning Certificate of Deposit.
Certainty Equivalent - An amount offered instead of a chance to receive
a possibly higher but
Certificate Of Deposit (CD) - A certificate issued indicating a specific
amount of money has been deposited. CDs include a maturity date and a
specified interest rate.
Characteristic Line - A model showing change (beta) in a particular
security.
Cheapest to deliver issue - The rate that the seller of a futures
contract can earn by buying a contract and then delivering at settlement
date.
Chicago Board Options Exchange (CBOE) - An exchange where standardized
option contracts are publicly traded. Location where index options,
foreign currency options, and stock options are traded.
Chicago Mercantile Exchange (CME) - A location where futures and options
are traded and trading rules are enforced, a not-for-profit corporation.
Chinese Hedge - Term used in reference to convertible securities.
Trading hedge where one is short the convertible and long the underlying
common.
Chinese Wall - Barrier blocking communication between traders and
financiers with the purpose of preventing the sharing of insider
information.
Churning - The act of excessive trading of a client’s account by a
broker in order to increase his/her commissions.
Claim Dilution - Lessening of the likelihood that one or more of a
firm’s claimants will be repaid completely.
Claimant - A party to a contract, explicit or implicit.
Class of options - Option contracts of the same type (call or put) and
style (American, European, or Capped) that cover the same underlying
security.
Clean - Referring to general equities, a block trade that matches buy or
sell orders therefore not requiring the block trader to hold any
inventory risk.
Clean Opinion - An opinion of unqualified acceptance of a company’s
financial statements by an auditor.
Clean Price - A bond price not including accrued interest.
Clean up - Referring to general equities, purchase or sale of all
remaining stock or the last piece of a block, leaving a "net zero
position".
Clear - Finalizing of a trade, settling out the details of the
transaction.
Clear A Position - Leaving no ownership or obligation, to eliminate a
position, long or short.
Clearing House Interbank Payments System (CHIPS) - A system operated by
a group of large banks that involves the international wire transfer of
high value payments.
Clearing Member - A member firm of an exchange that is also a member of
a clearinghouse. All non-clearing member’s trades must be settled
through a clearing member.
Clearinghouse - A clearing organization through which all transactions
of a futures exchange are settled by process of matching purchases with
sales, also charged with ensuring proper conduct in accord with
procedures as well as financing of the entire futures exchange.
Clientele Effect - When a group of investors express a preference that
the firm follow a certain financing policy.
Close - The end of the trading session, when a marketplace ends its
regular trading activities. The close for the major US stock exchanges
is 4:PM EST.
Close A Position - Referring to general equities, eliminating a
particular investment from one’s portfolio.
Closed-end fund - A mutual fund that does not accept new investments or
withdrawals after its initial formation, an investment company that
usually does not redeem its shares but may trade above or below its net
asset value.
Closed-end Mortgage - A mortgage that does not allow for any additional
debt to be issued against it.
Closely held company - A firm that has a small group of shareholders who
controls the company.
Closing Purchase - A transaction conducted with the intention of
reducing or eliminating a short position in a stock or options.
Closing Range - The range of high and low prices/ bids and offers
recorded during the close.
Closing Sale - A transaction conducted with the intention of reducing or
eliminating a long position in a stock or options.
Closing Transaction - Referring to derivative products, a transaction
that eliminates an existing position.
Cluster Analysis - techniques used to identify groups or clusters of
stocks whose returns are highly correlated.
CME - Abbreviation for the Chicago Mercantile Exchange.
Coffee, Sugar & Cocoa Exchange (CS&CE) - A commodity exchange for
trading futures and options on "softs", based in New York.
Coinsurance Effect - Terms referring to the fact that once a merger of
two firms occurs, the probability of default on either firm’s debt is
lessened.
Collar - The limit (either upper or lower) on the interest rate on an
adjustable mortgage or a floating rate note.
Collateral - An asset used to secure a loan, and which can be
repossessed in case of default.
Collateral Trust Bonds - A bond with provisions for a lien on stocks,
notes or other assets as security for investors.
Collateralized Mortgage Obligation (CMO) - A security with several
classes of bondholders with varying maturity dates, backed by a pool of
pass through rates.
Collection Float - The float created by the period of time between
depositing a check and when the funds are made available.
Collection Fractions - A percentage of sales collected during a given
month and each month following the month of sale.
Collection Policy - A firm’s procedure for the collection of its account
receivables.
Combination - Referring to derivative products, an arrangement of
options including two positions (long or short) with differing
expiration dates or strike prices.
Combination Strategy - An investment strategy involving either the
purchase or sale of both a put and call with the same expiration and
strike price.
Come In - Term referring to general equities meaning a fall in price.
Come Out - Referring to general equities, the opening, opposite of the
Close.
Come Out Of The Trade - Referring to general equities, the trader’s
position in a security as a result of a trade.
COMEX - The leading US market for metals futures and options trading,
formerly known as the Commodity Exchange.
Commercial Draft - A demand for payment.
Commercial Paper - A promissory note issued by a corporation. They are
short term, unsecured, and usually mature in less than 50 days.
Commercial Risk - Risk taken when investing with a foreign debtor due to
bankruptcy or other business events.
Commingling - The act of combining a client’s assets with those of the
brokerage in order to gain financial status. This is an illegal act.
Commission - Fee paid to a broker in order to execute a trade, usually
based on the number of shares, bonds, options or the dollar value of the
trade.
Commission Broker - Person who buys and sells stocks for a brokerage
house on the floor of an exchange and is paid on a commission basis.
Commission House - A firm that buys and sells futures contracts for
customers.
Commitment - When a trader assumes the obligation to accept or make
delivery on a contract in futures.
Commitment Fee - Charge paid to a commercial bank for its commitment to
lend funds that have not yet been advanced.
Committee On Uniform Securities Identification Procedures - Committee
charged with assigning identifying codes and symbols to all securities.
Commodities Exchange Center (CEC) - Center where five of New York’s
futures exchanges are located; COMEX (Commodity Exchange, Inc.), CSC
(Coffee, Sugar, and Cocoa Exchange), NYFE (New York Futures Exchange),
NYMEX (New York Mercantile Exchange), and the New York Cotton Exchange.
Commodity - Any bulk good that is usually bought and sold via futures
contracts such as grains, meats, and metals.
Commodity Futures Trading Commission (CFTC) - Trading commission created
by the government to regulate exchange trading in futures.
Common Code - Identification code used by both CEDEL and Euroclear, a
nine digit code.
Common Market - A market where two or more countries allow free movement
of
Common Shares - Shares that usually entitle the holder to vote at
shareholder’s meetings and that provide a discretionary dividend.
Common Size Statement - A statement in which all items are expressed as
a percentage of a common denominator (or base figure) to be used for
comparison purposes.
Common Stock - Referring to general equities, units of ownership of a
publicly held corporation. Holders are allowed to vote at shareholder’s
meetings and are entitled to dividend payments and/or capital
appreciation.
Common Stock Equity - Total assets less the total liabilities divided by
the common shares outstanding. Usually will be the same as shareholder’s
equity unless a significant number of preferred shares are outstanding.
Common Stock Equivalent - Used when optioned common stock is trading at
a high level, a security that is traded like an equity issue.
Common Stock Market - The trading market for equities, preferred stock
is not included in this market.
Common Stock Ratios - Measure of the cash flow per share versus equity
or book value of a firm’s shares.
Common Stock/Other Equity - Sometimes referred to as "shareholder’s
equity"; this term refers to the value of outstanding common shares at
par plus accumulated retained earnings.
Common-Base-Year Analysis - A method of analyzing accounting data over
multiple years as percentages.
Common-Size Analysis - Manner of representing items on a balance sheet
as percentages of assets, also used on income statements when
representing items as percentages of sales.
Company - Term used to represent a publicly held corporation when
repurchasing its own shares, used in over the counter trading and for
listed equity securities.
Comparative Credit Analysis - A financial analysis in which one compares
a firm’s debt rating to that of firm’s with a desirable debt rating.
Comparison Universe - Used to assess the performance of a portfolio
manager by comparing that person to a group of money managers with a
similar investment philosophy.
Compensating Balance - An amount left over in a bank in order to provide
for indirect compensation for services provided.
Competition Ahead - Situation that occurs when one market maker
transacts with an investment bank at the stated market level before the
present offer (of another market maker) has been made.
Competitive Bidding - A bid offering process where securities firms
submit bids in competition with other securities firms.
Complete - Referring to general equities, meaning fill.
Complete Capital Market - A market that provides for a distinct
marketable security for every possible outcome.
Completion Bonding - Bonding or insurance that a construction contract
will be entirely and successfully completed.
Composition - An arrangement gone into voluntarily in order to
restructure a company’s outstanding debt and allow for a reduced
payment.
Compound Interest - Interest that is paid on previously earned interest
along with that of the principal.
Compound Option - An option on an option.
Compounding - A term often used when referring to interest, the
accumulation of the time value of money ahead in time.
Compounding Frequency - How often an item (i.e. interest) is compounded
in a year.
Compounding Period - The period of time that passes before interest
compounds.
Concentration Account - A central account into which funds collected at
various locations are transferred.
Concentration Services - The moving of cash from various locations
(lock-boxes) into a concentration account.
Concession Agreement - An agreement or understanding between a company
and a government that outlines specific rules under which the company
will operate in a particular locality.
Conditional Call - Referring to convertible securities, situation that
allows a company to effect an earlier call.
Conditional Sales Contracts - Contract involving an equipment
manufacturer (or a bank or finance company who purchased the contract)
acting as a lender
Condor - Referring to derivative products, a strategy consisting of both
puts and calls at various strike prices that capitalize on a narrow
range of volatility. Its payoff diagram takes the shape of a bird.
Confidence Indicator - Measurement of investor’s faith in the securities
market and the economy as a whole.
Confidence Letter - Referring to risk arbitrage, a letter or statement
by an investment bank that illustrates a high confidence level for the
financing of its client’s takeover attempt.
Confirmation - A written statement following any trade that spells out
the details of the trade.
Conglomerate - A firm with two or more divisions engaged in unrelated
businesses.
Conglomerate Merger - A merger of two or more firms that are engaged in
unrelated business.
Consensus Forecast - The basis for all financial forecasts for a
company.
Consol - Often used in Great Britain, a bond issued by the government
that has no maturity.
Consolidated Tape - Referring to equity securities, the combined ticker
tapes of the NYSE and the curb.
Consolidation - Joining two or more firms together in order to form a
new entity.
Consortium Banks - Common in the Euromarket, these are merchant banking
subsidiaries set up by several banks, often of varying nationalities.
Constant-Growth Model - A model involving dividend discounts which
assumes a fixed growth rate for future dividends, and a single discount,
often referred to as the " Gordon Shapiro" model.
Consumer Credit - Retail credit extended to consumers by a firm for the
purchase of goods and services
Consumer Price Index - A measure published by the US Department of Labor
on a monthly basis, measuring the price of consumer goods and services,
and functioning as an indicator of the pace of inflation in the US
economy.
Contagion - Situation where there is a much higher than expected
correlation between equity and bond returns.
Contango - Situation in the market where futures prices are higher in
the distant delivery months.
Contingency Order - Referring to general equities, a swap or switch
order where the trader will buy one security if the trader can sell
another, given that conditions reach a certain level.
Contingent Claim - A claim that can be made only if certain specified
outcomes occur.
Contingent Deferred Sales Charge - The load of a back end load fund.
Contingent Immunization - Practice of a money manger to pursue an active
strategy with a bond portfolio until/unless the potential return us
driven down to a specified "safety net" level.
Contingent Pension Liability - A firm’s liability to its pension plan
participants, the firm is liable for up to 39% of its net worth.
Continuous Compounding - Interest continuously compounded, or
accumulating the time value of money on a constant basis including
earning interest on itself.
Continuous Random Variable - A value that can take any fractional value
within a specified range.
Contract - The agreement between buyer and seller, a term describing a
unit of trading for futures.
Contract Month - Period of time in which futures contracts may be
satisfied through deliveries.
Contramarket Stock - Referring to general equities, a stock that goes in
contrast to the trend of the market as a whole.
Contribution Margin - Variable revenue less variable cost.
Control - Having at least 50% of the outstanding votes plus one vote.
Controlled Disbursement - Presenting checks at only one time each day.
Controlled Foreign Corporation - Any foreign corporation whose voting
stock is more than 50% owned by American stockholders who each own at
least 10% of the voting power.
Controller - Person in a corporation who is responsible for accounting
activities.
Convenience Yield - An advantage to a firm that is holding the commodity
instead of the future.
Convention Statement - A statement filed annually by a life insurance
company in every state where it conducts business. The statement shows
the assets, liabilities, and surplus of the insurance company.
Conventional Mortgage - A loan based on the collateral for the mortgage
and the credit history of the borrower.
Conventional Pass-Through - A mortgage pass-through security that is not
guaranteed by the government.
Conventional Project - A project that begins with a negative cash flow,
hopefully followed by future positive cash flows.
Convergence - The coming together of the futures price and the cash
price, The futures price moves toward the price of the underlying cash
commodity as the time value decreases.
Conversion Factors - Rules used to determine the price of each
deliverable Treasury issue against the Treasury bond futures contract.
Conversion Parity/Value - Price of a common stock at which a common bond
can become exchanged for common shares of equal value.
Conversion Premium - Amount or percentage by which the conversion price
of a security is greater than the prevailing common stock price at the
time of issue.
Conversion Price - Often referring to convertible securities, the price
at which preferred stock or convertible bonds can be converted into
common stock.
Conversion Ratio - Often referring to convertible securities, the ratio
between the number of shares of common stock to be received in exchange
for each convertible bond or preferred share at the time of conversion.
This ratio is determined at the time of issue.
Conversion Value - The value of a convertible security if it were to be
converted immediately, often called the parity value.
Convertibility - The degree of ease to exchange a currency without
government control.
Convertible - Often referring to preferred shares, a security that can
be converted into units of another security.
Convertible 100 - An index from Goldman Sachs of the 100 convertibles
considered to be of the greatest institutional importance.
Convertible Bond - Often referring to convertible securities, the debt
of a corporation which could be exchanged for a number of common shares
Convertible Eurobond - A Eurobond that may be converted or exchanged for
another asset.
Convertible Exchangeable Preferred Stock - A preferred stock that may be
exchanged for convertible bonds.
Convertible Preferred Stock - Preferred stock that allows for the holder
to convert it to common stock.
Convertible Price - The share price, specified by contract, at which a
convertible security can be converted into common stock.
Convertible Security - Convertible preferred stock or convertible bonds
that can be converted into common stock if the holder wishes.
Convex - Curves as on a graph, generally used to refer to the
price/yield relationship of bonds that are option-free.
Cooling-Off Period - A period of time between when a firm files its
prospectus with the SEC and its initial public offering. This period is
twenty days long and during that time, communications with investors is
restricted.
Cornering The Market - Referring to general equities, gaining control of
the price of a commodity or security by purchasing a large volume. This
practice is illegal.
Corporate Acquisition - The purchase or acquiring of a firm by another
firm.
Corporate Bonds - Bond or debt obligations that are issued by
corporations
Corporate Charter - A document that creates a given corporation.
Corporate Finance - A discipline in the study of finance dealing with
the investments and financing of corporations.
Corporate Financial Planning - Long and short term financial planning of
a given firm.
Corporate Processing Float - The period of time needed in order to
process and deposit a customer’s payment.
Corporate Repurchase - Referring to general equities, the act of a
corporation purchasing its own stock.
Corporate Tax View - The opinion that because equity returns are taxed
on both the corporate and individual levels, debt is a less expensive
method of finance.
Corporate Taxable Equivalent - The rate of return required on a par bond
in order to meet the same after tax yield to maturity that the quoted
premium would generate.
Corporation - A legal entity that is separate from its owners, a form of
a business organization that has a charter or articles of incorporation
filed with the state.
Correction - Referring to general equities, a movement, either upward or
downward in an index, or individual stock, bond, or commodity that is
usually dramatic.
Correlation - Degree to which two variables are related, the measure of
relatedness of the movement of two variables
Cost Of Capital - The amount of return required for a capital budgeting
project.
Cost Of Carry - Referring to general equities, incidental costs incurred
while holding an investment position.
Cost Of Equity - The rate of return required for 100% equity investment.
Cost Of Funds - Interest rate that applies when money is borrowed.
Cost Of Lease Financing - The internal rate of return for a specified
lease.
Cost Of Limited Partner Capital - The cost or discount rate that equals
the after tax inflows with the inflows for capital raised from limited
partners.
Cost-Benefit Ratio - A measure of profitability, the present net value
divided by the initial cost of an investment.
Cost-Of-Carry Market - Referring to derivative products, a market where
underlying commodities can be insured, stored, and converted into the
future easily.
Counter Trade - Barter, to exchange good for goods rather than for cash
Counterparties - The parties involved in an interest rate swap.
Counterparty - Opposing party, or the party of the other side of a
transaction.
Counterparty Risk - Possibility or risk that the party on the other side
of an agreement will default.
Country Beta - Measure figured by dividing the covariance of a national
economy’s rate of return and that of the world economy by the variance
of the world economy.
Country Economic Risk - Risk that developments in a national economy
will affect an international transaction.
Country Financial Risk - Risk that a nation will not be able to generate
enough foreign
Country Risk - Level of risk in a given country, because of politics,
economy, etc, that will affect the value of investments and loans in
that country.
Country Selection - A method of management that focuses on the
contribution to performance due to investing in the various stock
markets of the world.
Coupon - An interest payment made periodically to bondholders during the
life of the given bond.
Coupon Equivalent Yield - Interest cost based on a 365 day calendar
year.
Coupon Payments - Interest payments on a bond.
Coupon Rate - The stated percentage rate of interest in fixed income
securities such as bonds.
Covariance - A statistical measure showing the degree to which variables
move together.
Cover - The act of purchasing a contract in order to offset a previously
established short position.
Coverage Initiated - When analysts begin to pay attention to a security
that has become interesting enough or large enough to warrant it.
Coverage Ratios - A measure of the amount of cash flow generated through
earnings versus debt and lease obligations.
Covered Call - A short call option position that generally limits the
risk to the writer because the stock can be bought at a price other than
the market price, the writer owns the shares that are represented by the
option contract.
Covered Call Writing Strategy - An approach involving writing call
options on securities that the investor owns.
Covered Interest Arbitrage - The practice of investing in an instrument
denominated in a foreign currency using dollars. This "hedges" the
foreign exchange risk.
Covered Option - Referring to derivative products, an option position
offset by an opposite position in the underlying security. This approach
is often used in order to increase the current yield of stocks held and
to hedge against price declines of the underlying shares.
Covered Or Hedge Option Strategies - Approach that involves a position
in both the option and its underlying stock. This is done in order to
offset any unfavorable movement in either direction.
Covered Put - A put where the writer’s risk is limited by the fact that
he/she is also short in the corresponding stock, or has deposited cash
or equivalents equal to the exercise of the option.
Cramdown - The ability of the court to approve a plan of bankruptcy
reorganization in spite of the objections of some creditors.
Crash - A dramatic downturn or loss in market value.
Crawling Peg - A system that automatically revises the exchange rate by
establishing a par value around which the rate can vary up to a given
point.
Credit - Money that had been loaned.
Credit Analysis - Process of reviewing data on companies and bond issues
in order to determine the amount of risk involved in entering into a
contractual agreement with that company or bond issue.
Credit Enhancement - An entity can purchase the financial guarantee of a
large insurer in order to raise funds.
Credit Period - The period of time for which credit is granted to a
customer.
Credit Risk - The risk that a borrower or debt security issuer will
default on obligations.
Credit Scoring - A system used to determine a customer’s credit
worthiness and define it with one score by using several financial
characteristics as indicators.
Credit Spread - Referring to derivative products, the difference in
value when one option is sold and it exceeds the value of the one
bought.
Crediting Rate - Rate of interest offered on an insurance policy to be
used as an investment.
Creditor - Entity or party that lends money.
CREST - A real-time system used for share and corporate security
settlement, used in the UK and Ireland.
Cross - Referring to listed equity securities, a transaction where one
broker acts as agent for both sides of a trade. This is legal only if
the broker offers the securities publicly at a higher price before
acting as agent for the transaction.
Cross Default - The phenomenon that occurs when default on an obligation
triggers default on another debt obligation.
Cross Hedging - Referring to derivative products, hedging with a futures
contract that is different than the underlying being hedged.
Cross Holdings - A situation where one firm holds shares in another
firm.
Cross Rates - The rate expressed as a ratio between two foreign exchange
rates, both are expressed in terms of a third currency.
Cross Sectional Approach - Method of statistical analysis applied to a
group of firms at a particular point in time.
Cross Share Holdings - A firm or government entity’s equity ownership in
another firm’s shares.
Cross-Border Risk - The risk taken due to events associated with a
particular country rather than events associated with only a certain
country or agent.
Crossed Market - Referring to general equities, sometimes referred to as
an "Overlap of the market", condition where the inside market’s highest
bid price is above the lowest offer price.
Crowd Trading - Referring to listed equity securities, exchange members
with specialized functions.
Crown Jewel - An especially valuable firm asset, often the main focus of
takeover attempts.
Cum Dividend - Referring to general equities, a stock whose buyer is
eligible for a declared dividend , "with dividend".
Cumulative Abnormal Return - The difference in amount between the actual
return from a stock after a release of news to the market and the
expected return.
Cumulative Dividend Feature - The requirement for any preferred stock
dividends that have been missed be paid before any common dividend
payments.
Cumulative Preferred Stock - A preferred stock that had accrued
dividends because the issuer has not made timely dividend payments.
Cumulative Translation Adjustment (CTA) Account - An account shown on a
balance sheet where gains/losses from translation are accounted for.
Cumulative Voting - A voting system for the election of directors where
the shareholder’s number of votes equals his/her number of shares held
multiplied by the number of candidates.
Currency - Another term for money.
Currency Arbitrage - The act of buying a currency in one market and then
selling it in another in order to take advantage of changes in exchange
rates.
Currency Basket - In order to set the market value of a currency, using
the value of a portfolio of specific amounts of other currencies.
Currency Future - A futures contract for delivery of a foreign currency.
Currency Hedge - Often referring to international equities, a technique
used to guard against fluctuations in foreign exchange.
Currency Option - A foreign currency option to either buy or sell.
Currency Overvaluation - Often referring to international equities, a
condition where a currency’s private demand at the current exchange rate
is less that the total private supply.
Currency Risk Sharing - A situation where the parties involved in a
transaction agree to share the currency risk.
Currency Selection - A process where an investor decides among
investments which are to be denominated in different currencies.
Currency Swap - Switching a series of payment obligations denominated in
one currency for the same in a different currency.
Current Account - The flow of gifts, goods and services between
countries.
Current Assets - A firm’s assets that could be converted into cash in 12
months or less, includes, inventory, accounts receivable, etc.
Current Coupon - A bond that is selling at or close to par
Current Issue - The most recently auctioned Treasury securities issue.
Current Liabilities - A firm’s liabilities that are due for payment in
12 months or less, includes, payroll, account’s payable, etc.
Current Market Value - Often used to describe the value of a portfolio,
the current price of an asset or security if it were to be sold
Current Maturity - In regard to an outstanding debt instrument, the
current time of maturity.
Current Rate Method - This method translates all foreign currency items
on the balance sheet and the income statement using the current rate of
exchange.
Current Ratio - Ratio of the current assets divided by the current
liabilities. This indicates a firm’s liquidity or ability to pay off
short-term debt.
Current Yield - Referring to notes or bonds, the coupon rate divided by
the bond price.
Current/Non-current Method - In reference to a foreign subsidiary’s
current assets, this method of translating assets and liabilities into
home currency allows for the current assets/liabilities to be expressed
in the current exchange rate. The non-current assets are expressed at
the exchange rate that was in effect at the time the asset/liability
were acquired or incurred.
Cushion Bonds - Bonds that offer a lower risk, they are high-coupon
bonds that sell at a small or moderate premium.
Custodial Fees - Amount paid to an institution in return for the
safekeeping of a security.
Custodian - Person or institution given the authority to direct the
investment activities on behalf of another party.
Custodian Bank - Often refers to international equities, bank that keeps
stock certificates or other assets for a corporation, individual, etc.
Customs Union - A union or agreement between two or more nations in
order to encourage trade among members.
Cyclical Stock - Referring to general equities, stocks that tend to rise
and fall quickly when the economy changes. |
