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Certificates Of Amortized Revolving Debt (Card), Certificates Of Automobile Receivables (Car.

Financial definitions for business owners C

  • Definition Capital Explain Money invested in a firm
  • Definition CMO Explain See: Collateralized mortgage obligation
  • Definition Control Explain 50% of the outstanding votes plus one vote
  • Definition Commodity paper Explain A loan or advance secured by commodities
  • Definition Control stock Explain The shares owned by the controlling shareholders of a corporation
  • Definition Capacity Explain Credit grantors' measurement of a person's ability to repay loans
  • Definition Company-specific risk Explain Related: Unsystematic risk
  • Definition Contribution margin Explain The difference between variable revenue and variable cost
  • Definition Canadian agencies Explain Agency banks established by Canadian Banks in the U.S
  • Definition Convertible security Explain common stock at the option of the securityholder; includes convertible bonds and convertible preferred stock
  • Definition Current assets Explain Value of cash, accounts receivable, inventories, marketable securities and other assets that could be converted to cash in less than 1 year
  • Definition Current coupon Explain is, a bond with a coupon close to the yields currently offered on new bonds of a similar maturity and credit risk
  • Definition Current-coupon issues Explain Related: Benchmark issues
  • Definition Current income Explain Money that is routinely received from investments in the form of dividends, interest, and other income sources
  • Definition Current issue Explain In Treasury securities, the most recently auctioned issue. Trading is more active in current issues than in off-the-run issues
  • Definition Current liabilities Explain Amount owed for salaries, interest, accounts payable and other debts due within 1 year
  • Definition Current market value Explain The value of a client's portfolio at today's market price, as listed in a brokerage statement
  • Definition Current maturity Explain Current time to maturity on an outstanding debt instrument
  • Definition Current/noncurrent method Explain subsidiary's current assets and liabilities into home currency at the current exchange rate while noncurrent assets and liabilities
  • Definition Current production rate Explain The highest interest rate permissible on current Government National Mortgage Association, mortgage-backed securities
  • Definition Current rate method Explain The translation of all foreign currency balance sheet and income statement items at the current exchange rate
  • Definition Current ratio Explain ability. Determined by dividing current assets by current liabilities. The higher the ratio, the more liquid the company
  • Definition Currency risk sharing Explain transaction to share the currency risk associated with the transaction. The arrangement involves a customized hedge contract embedded in
  • Definition Cushion Explain The minimum period between the time a bond is issued and the time it is called
  • Definition Cushion bonds Explain a moderate premium because they are callable at a price below that at which a comparable noncallable bond would sell. Cushion bonds offer
  • Definition Cushion theory Explain The theory that a stock with many short positions taken in it will rise, because these positions must be covered by the stock
  • Definition Custodial fees Explain Fees charged by an institution that holds securities in safekeeping for an investor
  • Definition Customary payout ratios Explain A range of payout ratios that is typical according to an analysis of comparable firms
  • Definition "Customer picking prices" Explain Customer is firm on price and has set the price at which to transact
  • Definition Customer's loan consent Explain that allows a broker to borrow margined securities up to the level of the customer's debit balance to help cover other customers'
  • Definition Customers' net debit balance Explain The total amount of credit given by NYSE member firms to finance customers purchasing securities
  • Definition Customized benchmarks Explain A benchmark that is designed to meet a client's requirements and long-term objectives
  • Definition Customs union Explain An agreement by two or more countries to erect a common external tariff and to abolish restrictions on trade among members
  • Definition Cutoff point Explain The lowest rate of return acceptable on investments
  • Definition Creditor Explain Lender of money
  • Definition Creditor's committee Explain A group representing firms that have claims on a company facing bankruptcy or extreme financial difficulty
  • Definition Creeping tender offer Explain to circumvent certain provisions of the Williams Act gradually acquires shares of a target company in the open market
  • Definition CREST Explain settlement system for U.K. and Irish shares and other corporate securities. CrestCo has provided settlement systems for government bonds
  • Definition Cross Explain same broker acts as agent for both sides of the trade; a legal practice only if the broker first offers the securities publicly at a price
  • Definition Cross-border risk Explain international investments caused by events associated with a particular country as opposed to events associated solely with a particular
  • Definition Cross-default Explain A provision under which default on one debt obligation triggers default on another debt obligation
  • Definition Cross hedging Explain with a futures contract that is different from the underlying being hedged. Use of a hedging instrument different from the security being
  • Definition Convex Explain Curved, as in the shape of the outsid of a circle. Usually referring to the price/required yield relationship for option-free bonds
  • Definition Cross-holdings Explain shares in another firm. One needs to allow for cross-holdings when aggregating capitalizations of firms. Ignoring cross-holdings leads to
  • Definition Cross rates Explain currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate
  • Definition Cross-sectional approach Explain A statistical methodology applied to a set of firms at a particular time
  • Definition Cross-share holdings Explain Often used in risk arbitrage. Corporations' or governments' equity share ownership in another corporation's shares
  • Definition Crossed trade Explain buy and sell orders without recording the trade on the exchange, thus not allowing other traders to take advantage of a more favorable
  • Definition Crossover rate Explain The return at which two alternative projects have the same net present value
  • Definition Crowding out Explain Heavy federal borrowing that drives interest rates up and prevents businesses and consumers from borrowing when they would like to
  • Definition Cum dividend Explain buyer is eligible to receive a declared dividend. Stocks are usually cum dividend for trades made on or before the fifth trading day
  • Definition Cum rights Explain With rights
  • Definition Cumulative abnormal return (CAR) Explain expected return on a stock (systematic risk multiplied by the realized market return) and the actual return often used to evaluate the
  • Definition Cumulative dividend feature Explain A requirement that any missed preferred or preference stock dividends be paid in full before any common dividend payment is made
  • Definition Cumulative preferred stock Explain Preferred stock whose dividends accrue, should the issuer not make timely dividend payments. Related: Non-cumulative preferred stock
  • Definition Cumulative probability distribution Explain that the random variable will attain a value less than or equal to each value that the random variable can take on
  • Definition Cumulative voting Explain corporation in which shareholder's total number of votes is equal to the number of shares held times the number of candidates
  • Definition Currency Explain Money
  • Definition Currency arbitrage Explain exchange rates in different money markets by buying a currency in one market and selling it in another market
  • Definition Currency basket Explain amounts of individual currencies, used as the basis for setting the market value of another currency. It is also referred to as a currency
  • Definition Currency in circulation Explain Paper money, coins, and demand deposits that constitute all the money circulating in the economy
  • Definition Currency future Explain A financial future contract for the delivery of a specified foreign currency
  • Definition Currency hedge Explain equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro
  • Definition Currency option Explain An option to buy or sell a foreign currency
  • Definition Currency overvaluation Explain equities: (1) consideration that a currency is overvalued if private demand for the currency at the going exchange rate is less than total
  • Definition Currency risk Explain Related: Exchange rate risk
  • Definition Currency selection Explain Asset allocation in which the investor chooses among investments denominated in different currencies
  • Definition Currency swap Explain specified payment obligations denominated in one currency for a series of specified payment obligations denominated in a different currency
  • Definition Current account Explain Net flow of goods, services, and unilateral transactions (gifts) between countries
  • Definition Coupon bond Explain A bond featuring coupons that must be presented to the issuer in order to receive interest payments
  • Definition Coupon equivalent yield Explain True interest cost expressed on the basis of a 365-day year
  • Definition Coupon pass Explain dealers to determine the inventory and maturities of their Treasury securities. The desk then decides whether to buy or sell certain issues
  • Definition Coupon payments Explain A bond's interest payments
  • Definition Coupon rate Explain In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year
  • Definition Covariance Explain which random variables move together. A positive covariance implies that one variable is above (below) its mean value when the other
  • Definition Covenants Explain preferred stock agreement that require the bond or preferred stock issuer to take certain specified actions (affirmative covenants) or to
  • Definition Cover Explain The purchase of a contract to offset a previously established short position
  • Definition Coverage initiated Explain analysts begin following a particular security. This usually happens when there is enough trading in to warrant attention by the investment
  • Definition Coverage ratios Explain cash flows generated through earnings for purposes of meeting debt and lease obligations, including the interest coverage ratio and the
  • Definition Covered call Explain the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk
  • Definition Covered or hedge option strategies Explain an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in
  • Definition Covered interest arbitrage Explain dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the
  • Definition Covered option Explain Option position that is offset by an equal and opposite position in the underlying security. Antithesis of naked option
  • Definition Covered put Explain option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash equivalents equal to the exercise of
  • Definition Covered writer Explain An investor who writes options only on stock that he or she owns, so that option positions may be collected
  • Definition Cramdown Explain The ability of the bankruptcy court to confirm a plan of reorganization over the objections of some classes of creditors
  • Definition Cram-down deal Explain forced to accept undesirable terms, such as junk bonds instead of cash or equity, due to the absence of any better alternatives
  • Definition Crash Explain Dramatic loss in market value. The last great crash was in 1929. Some refer to October 1987 as a crash but the market return was positive
  • Definition Crawling peg Explain exchange rate. It involves establishing a par value around which the rate can vary up to a given percent. The par value is revised
  • Definition Credible signal Explain A signal that provides accurate information; a signal that can distinguish among senders
  • Definition Credit Explain Money loaned
  • Definition Credit analysis Explain bond issues in order to estimate the ability of the issuer to live up to its future contractual obligations. Related: Default risk
  • Definition Credit balance Explain The surplus in a cash account with a broker after purchases have been paid for, plus the extra cash from the sale of securities
  • Definition Credit bureau Explain An agency that researches the credit history of consumers so that creditors can make decisions about granting of loans
  • Definition Credit enhancement Explain Purchase of the financial guarantee of a large insurance company to raise funds
  • Definition Credit insurance Explain Insurance against abnormal losses due to unpaid accounts receivable
  • Definition Credit period Explain The length of time for which a firm's customer is granted credit
  • Definition Creditworthiness Explain Eligibility of an individual or firm to borrow money
  • Definition Credit risk Explain securities or a borrower may default on its obligations, or that the payment may not be made on a negotiable instrument. Related: Default
  • Definition Credit scoring Explain several financial characteristics to form a single score to represent a customer's creditworthiness
  • Definition Credit spread Explain Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a credit spread
  • Definition Credit union Explain A not-for-profit institution that is operated as a cooperative and offers financial services such as low-interest loans, to its members
  • Definition Credit watch Explain A warning by a bond rating firm indicating that a company's credit rating may change after the current review is concluded
  • Definition Crediting rate Explain The interest rate offered on an investment type insurance policy
  • Definition Corporate repurchase Explain own stock in the marketplace. Reasons for repurchase include putting idle cash to use, raising EPS, creating support for a stock price
  • Definition Corporate tax view Explain The argument that double (corporate and individual) taxation of equity returns makes debt a cheaper financing method
  • Definition Corporate taxable equivalent Explain to produce the same after-tax yield to maturity that the quoted premium or discount bond would generate
  • Definition Corporation Explain distinct from its owners. A corporation is allowed to own assets, incur liabilities, and sell securities, among other things
  • Definition Correlation coefficient Explain the dependence of two random variables, defined as the covariance divided by the standard deviations of two variables
  • Definition Correspondent Explain services (acts as an intermediary) in a market for another organization that does not have access to that market
  • Definition Cost accounting Explain A branch of accounting that provides information to help the management of a firm evaluate production costs and efficiency
  • Definition Cost basis Explain The original price of an asset, used to determine capital gains
  • Definition Cost-benefit ratio Explain The net present value of an investment divided by the investment's initial cost. Also called the profitability index
  • Definition Cost of capital Explain The required return for a capital budgeting project
  • Definition Cost of carry Explain investor has an investment position. Examples include interest on long positions in margin account, dividend lost on short margin positions
  • Definition Cost-of-carry market Explain contracts trade in a cost-of-carry market where the underlying commodity can be stored, insured, and converted into the future easily and
  • Definition Convexity Explain Property that a curve is above a straight line connecting two end points. If the curve falls below the straight line, it is called concave
  • Definition Cost company arrangement Explain a project receive output free of charge but agree to pay all operating and financing charges of the project
  • Definition Cost of equity Explain The required rate of return for an investment of 100% equity
  • Definition Cost of funds Explain Interest rate associated with borrowing money
  • Definition Cost of goods sold Explain The total cost of buying raw materials, and paying for all the factors that go into producing finished goods
  • Definition Cost of lease financing Explain A lease's internal rate of return
  • Definition Cost of limited partner capital Explain The discount rate that equates the after-tax inflows with outflows for capital raised from limited partners
  • Definition "Cost me" Explain price I must pay to obtain the securities you wish to buy is [$] . Usually, a standard markup (1/8) is then applied for resale to this
  • Definition Cost-plus contract Explain A contract in which the selling price is based on the total cost of production plus a fixed percentage or fixed amount
  • Definition Cost-push inflation Explain usually from increased raw material or labor costs that push up the costs of production. Related: Demand-pull inflation
  • Definition Cost records Explain The records maintained by an investor of the prices at which securities transactions are made, so that capital gains can be computed
  • Definition Council of Economic Advisers Explain President of the United States to provide economic counsel and help prepare the president's budget presentation to Congress
  • Definition Countercyclical stocks Explain Stocks whose price tends to rise when the economy is in recession or the market is bearish, and vice versa
  • Definition Counter trade Explain The exchange of goods for other goods rather than for cash; barter
  • Definition Counterpart items Explain items are analogous to unrequited transfers in the current account. They arise through the double-entry system in balance of payments
  • Definition Counterparties Explain The parties to an interest rate swap
  • Definition Counterparty Explain Party on the other side of a trade or transaction
  • Definition Counterparty risk Explain agreement will default. In an options contract, the risk to the option buyer that the option writer will not buy or sell the underlying as
  • Definition Country beta Explain rate of return and the rate of return of the world economy divided by the variance of the world economy
  • Definition Country economic risk Explain Developments in a national economy that can affect the outcome of an international financial transaction
  • Definition Country financial risk Explain national economy to generate enough foreign exchange to meet payments of interest and principal on its foreign debt
  • Definition Country risk Explain General level of political, financial, and economic uncertainty in a country affect which the value of loans or investments in that country
  • Definition Country selection Explain management that measures the contribution to performance attributable to investing in the better-performing stock markets of the world
  • Definition Coupon Explain The periodic interest payment made to the bondholders during the life of the bond
  • Definition Conversion feature Explain a particular investment to another form of investment, such as switching between mutual funds or converting preferred stock or bonds to
  • Definition Conversion parity price Explain Related: Market conversion price
  • Definition Conversion parity/value Explain securities. Common stock price at which a convertible bond can become exchangeable for common shares of equal value; value of a convertible
  • Definition Conversion premium Explain price of a convertible security exceeds the prevailing common stock price at the time the convertible security is issued
  • Definition Conversion price Explain securities. Dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock, as specified when
  • Definition Conversion ratio Explain securities. Relationship that determines how many shares of common stock will be received in exchange for each convertible bond or
  • Definition Conversion value Explain The value of a convertible security if it is converted immediately. Also called parity value
  • Definition Convertibility Explain The ability to exchange a currency without government restrictions or controls
  • Definition Convertible bond Explain corporation that can be exchanged for a set number of common shares of the issuing corporation at a prestated conversion price
  • Definition Convertible eurobond Explain A eurobond that can be converted into another asset, often through exercise of attached warrants
  • Definition Convertible exchangeable preferred stock Explain exchanged, at the issuer's option, into convertible bonds that have the same conversion features as the convertible preferred stock
  • Definition Convertible 100 Explain convertibles of greatest institutional importance. Weighted by issue size, it measures the performance of its components against that of
  • Definition Convertible preferred stock Explain Preferred stock that can be converted into common stock at the option of the holder. See also: participating convertible preferred stock
  • Definition Convertible price Explain The contractually specified price per share at which a convertible security can be converted into shares of common stock
  • Definition Cook the books Explain To deliberately falsify the financial statements of a company. This is an illegal practice
  • Definition Cooling-off period Explain of a preliminary prospectus with the Securities and Exchange Commission and the actual public offering of the securities
  • Definition Cooperative Explain Examples are agriculture cooperatives that assist farmers in selling their products more efficiently and apartment buildings owned by the
  • Definition Copenhagen Stock Exchange Explain The only securities exchange in Denmark. It features electronic trading of stocks, bonds, futures, and options
  • Definition Core capital Explain The capital required of a thrift institution, which must be at least 2% of assets to meet the rules of the Federal Home Loan Bank
  • Definition Core competence Explain Primary area of expertise. Narrowly defined fields or tasks at which a company or business excels. Primary areas of specialty
  • Definition Cornering the market Explain Purchasing a security or commodity in such volume as to achieve control over its price. An illegal practice
  • Definition Corporate acquisition Explain The acquisition of one firm by another firm
  • Definition Corporate bonds Explain Debt obligations issued by corporations
  • Definition Corporate charter Explain A legal document creating a corporation
  • Definition Corporate equivalent yield Explain A comparison of the after-tax yield of government bonds selling at a discount and corporate bonds selling at par
  • Definition Corporate finance Explain discipline of finance. It deals with the operation of the firm (both the investment decision and the financing decision) from the firm'
  • Definition Corporate financial management Explain within a corporation to create and maintain value through decision-making and proper resource management
  • Definition Corporate financial planning Explain Financial planning conducted by a firm that encompasses preparation of both long-and short-term financial plans
  • Definition Corporate financing committee Explain underwriters' SEC-required documents to ensure that proposed markups are fair and in the public interest
  • Definition Corporate income fund (CIF) Explain fixed portfolio of high-grade securities and other investments, usually with monthly distribution of income
  • Definition Corporate processing float Explain of payment from a customer and the deposit of the customer's check in the firm's bank account; the time required to process
  • Definition Contango Explain A market condition in which futures prices are higher in the distant delivery months
  • Definition Contingency order Explain order to buy one security, if the trader can sell another, usually given that certain price limits or conditions reach a certain level
  • Definition Contingent claim Explain A claim that can be made only if one or more specified outcomes occur
  • Definition Contingent deferred sales charge (CDSC) Explain The formal name for the load of a back-end load fund
  • Definition Contingent immunization Explain manager pursues an active bond portfolio strategy until an adverse investment experience drives the then-available potential return down to
  • Definition Contingent pension liability Explain Under ERISA, a firm is liable to its pension plan participants for up to 39% of the net worth of the firm
  • Definition Continuous compounding Explain value of money forward in time on a continuous, or instantaneous, basis. Interest is earned constantly, and at each instant, the interest
  • Definition Continuous net settlement (CNS) Explain settlement using a clearing house, which matches transactions to securities available, resulting in one net receive or deliver position at
  • Definition Continuous random variable Explain A random value that can take any fractional value within specified ranges, as contrasted with a discrete variable
  • Definition Contra broker Explain The broker on the buy side of a sell order or the sell side of a buy order
  • Definition Contract Explain of trading for a financial or commodity future. Also, the actual bilateral agreement between the buyer and seller of a transaction as
  • Definition Contract month Explain The month in which futures contracts may be satisfied by making or accepting a delivery
  • Definition Contractual plan Explain mutual fund shares are purchased through periodic investments, usually featuring some sort of additional incentive for the fixed period
  • Definition Contramarket stock Explain stock that tends to go against the trend of the market as a whole, such as a commodities-related stock or one in an industry out of favor
  • Definition Contrarian Explain buy assets that have performed poorly and sell assets that have performed well. There are two possible reasons this strategy might work
  • Definition Capitalized\. Capitalization tableA table showing the capitalization of a firm, which typically includes the amount of capital obtained from each source - long-term debt and common equity - and the respective capitalization ratios\. Capitalization ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow\. Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity\. Capitalization rateThe rate of interest used to calculate the present value of a number of future payments\. capitalization Explain depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year
  • Definition Controlled commodities Explain Commodities regulated by the Commodities Exchange Act of 1936 in order to prevent fraud and manipulation in commodities futures markets
  • Definition Controlled disbursement Explain A service that provides for a single presentation of checks each day (typically in the early part of the day
  • Definition Controller Explain The corporate manager responsible for the firm's accounting activities
  • Definition Convenience yield Explain The extra advantage that firms derive from holding the commodity rather than a future position
  • Definition Convention statement Explain insurance company in each state where it does business in compliance with that state's regulations. The statement and supporting
  • Definition Conventional mortgage Explain A loan based on the credit of the borrower and on the collateral for the mortgage
  • Definition Conventional option Explain An option contract arranged off the trading floor and not traded regularly
  • Definition Conventional project Explain flow (cash outflow), which is expected to be followed by one or more future positive cash flows (cash inflows
  • Definition Convergence Explain contract toward the price of the underlying cash commodity. At the start, the contract price is higher because of time value. But as the
  • Definition Conversion Explain the exchange of a convertible security such as a bond into stock.In the context of mutual funds, refers to the free exchange of mutual
  • Definition Conversion factors Explain for determining the invoice price of each acceptable deliverable Treasury issue against the Treasury Bond futures contract
  • Definition Condor Explain strategy consisting of both puts and calls at different strike prices to capitalize on a narrow range of volatility. The payoff diagram
  • Definition Conduit theory Explain companies are merely conduits for capital gains, dividends, and interest, which are in fact passed through to shareholders, the investment
  • Definition Confidence indicator Explain the economy and the securities market. A low or deteriorating level of confidence is considered by many technical analysts as a bearish
  • Definition Confidence letter Explain is highly confident that the financing for its client/acquirer's takeover can and will be obtained. Often used in risk arbitrage
  • Definition Confidence level Explain In risk analysis, the degree of assurance that a specified failure rate is not exceeded
  • Definition "Confirm me out" Explain to the floor and check with the specialist or floor broker that my previously active order has been cancelled and was not executed . One
  • Definition Confirmation Explain trade in the securities markets. Confirmation is issued immediately after a trade is executed. It spells out settlement date, terms
  • Definition Conflict between bondholders and stockholders Explain interests in a corporation that conflict. Sources of conflict include dividends, distortion of investment, and underinvestment. Protective
  • Definition Conforming loans Explain qualifications of Freddie Mac or Fannie Mae, which are bought from lenders and issued as pass-through securities
  • Definition Conglomerate Explain A firm engaged in two or more unrelated businesses
  • Definition Conglomerate merger Explain A merger involving two or more firms that are in unrelated businesses
  • Definition Consensus forecast Explain The mean of all financial analysts' forecasts for a company
  • Definition Consol Explain Popular in Great Britain. The formula for valuing these bonds is simple. The consol payment divided by yield to maturity is the price of
  • Definition Consolidated financial statement Explain A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries
  • Definition Consolidated mortgage bond Explain A bond that covers several units of property, sometimes refinancing mortgages on the properties
  • Definition Consolidated tax return Explain A tax return combining the reports of affiliated companies, that are at least 80% owned by a parent company
  • Definition Consolidation Explain The combining of two or more firms to form an entirely new entity
  • Definition Consolidation loan Explain A loan that is used to combine and finance payments on other loans
  • Definition Consortium Explain A group of companies that cooperate and share resources in order to achieve a common objective
  • Definition Consortium banks Explain several banks that may or may not be of the same nationality. Consortium banks are common in the Euromarket and are active in loan
  • Definition Constant-dollar plan Explain investing a fixed amount of money at set intervals. The investor buys more shares when the price is low and fewer shares when the price is
  • Definition Constant dollars Explain Dollars of a base year used as a general measure of purchasing power
  • Definition Constant-growth model Explain an application of the dividend discount model that assumes (1) a fixed growth rate for future dividends, and (2) a single discount rate
  • Definition Constant yield method Explain Allocation of annual interest on a zero-coupon security for income tax use
  • Definition Construction loan Explain A short-term loan to finance building costs
  • Definition Constructive receipt Explain The date a taxpayer receives dividends or other income, for use in the determination of taxes
  • Definition Consumer credit Explain Credit a firm grants to consumers for the purchase of goods or services. Also called retail credit
  • Definition Consumer debenture Explain An investment note issued directly to the public by a financial institution
  • Definition Consumer durables Explain Consumer products that are expected to last three years or more, such as an automobile or a home appliance
  • Definition Consumer goods Explain Goods not used in production but, bought for personal or household use such as food, clothing, and entertainment
  • Definition Consumer interest Explain Interest paid on consumer loans; e.g., interest on credit cards and retail purchases
  • Definition Consumer Price Index Explain prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI every
  • Definition CAPS Explain See: Convertible adjustable preferred stock
  • Definition Contagion Explain returns. For example, under usual conditions we might observe a certain level of correlation of market returns. A period of contagion would
  • Definition Comparative credit analysis Explain Comparing a firm to others that have a desired target debt rating in order to deduce an appropriate financial ratio target
  • Definition Comparative statements Explain Financial statements for different periods, that allo the comparson of figures to illustrate trends in a company's performance
  • Definition Comparison Explain Short for comparison ticket, a memorandum between two brokers that confirms the details of a transaction to be carried out
  • Definition Comparison universe Explain A group of money managers of similar investment style used to assess relative performance of a portfolio manager
  • Definition Compensating balance Explain An excess balance that is left in a bank to provide indirect compensation for loans extended or services provided
  • Definition Competence Explain Sufficient ability or fitness for one's needs. The necessary abilities to be qualified to achieve a certain goal or complete a project
  • Definition Competition Explain Intra- or intermarket rivalry between or among businesses trying to obtain a larger piece of the same market share
  • Definition Competition ahead Explain whereby another O.T.C. market maker has transacted with investment bank at the stated market level before the bid/offer has been made
  • Definition Competitive bidding Explain A securities offering process in which securities firms submit competing bids to the issuer for the securities the issuer wishes to sell
  • Definition Competitive offering Explain An offering of securities through competitive bidding
  • Definition Complete Explain In the context of general equities, to fill an order
  • Definition Complete capital market Explain A market in which there is a distinctive marketable security for each and every possible outcome
  • Definition Complete portfolio Explain The entire portfolio, including risky and risk-free assets
  • Definition Completion bonding Explain Insurance that a construction contract will be completed successfully
  • Definition Completion risk Explain The risk that a project will not be brought into operation successfully
  • Definition Completion undertaking Explain project so that it meets certain specified performance criteria on or before a certain specified date, or (2) to repay project debt if the
  • Definition Compliance department Explain exchanges to ensure that all companies, traders, and brokerage firms comply with Securities and Exchange Commission and exchange rules and
  • Definition Composition Explain Voluntary arrangement to restructure a firm's debt, under which payment is reduced
  • Definition Class Explain options of the same type-put or call-with the same underlying security. See: Series. In general, refers to a category of assets such as
  • Definition Compound growth rate Explain The rate of growth of a figure, compounded over some period of time
  • Definition Compound interest Explain Interest paid on previously earned interest as well as on the principal
  • Definition Compound option Explain Option on an option
  • Definition Compounding Explain value of money forward in time. For example, interest earned in one period earns additional interest during each subsequent time period
  • Definition Compounding frequency Explain The number of compounding periods in a year. For example, quarterly compounding has a compounding frequency of 4
  • Definition Compounding period Explain The length of the time period that elapses before interest compounds (a quarter in the case of quarterly compounding
  • Definition Comprehensive due diligence investigation Explain business in conjunction with a securities offering to determine whether the firm's business and financial situation and its prospects
  • Definition Comptroller of the Currency Explain president, who keeps control over all national banks, and receives reports from the banks at least quarterly, to be published in
  • Definition Computerized market timing system Explain A computer system that compiles large amounts of trading data in search of patterns and trends to make buy and sell recommendations
  • Definition Concave Explain Property that a curve is below a straight line connecting two end points. If the curve falls above the straight line, it is called convesity
  • Definition Concentration account Explain A single centralized account into which funds collected at regional locations (lockboxes) are transferred
  • Definition Concentration services Explain Movement of cash from different lockbox locations into a single concentration account from which disbursements and investments are made
  • Definition Concession Explain The per-share or per-bond compensation of a selling group for participating in a corporate underwriting
  • Definition Company doctor Explain An executive, usually appointed from outside, brought in to turn a company around and make it profitable
  • Definition Concession agreement Explain An understanding between a company and the host government that specifies the rules under which the company can operate locally
  • Definition Conditional call Explain securities. Circumstances under which a company can effect an earlier call, usually stated as percentage of a stock's trading price
  • Definition Conditional call options Explain event a hign yield bond is called, the issuing corporation will replace the bond with a noncallable bond of the same life and terms as the
  • Definition Conditional sales contracts Explain except that the lender is either the equipment manufacturer or a bank or finance company to which the manufacturer has sold the
  • Definition COMEX Explain Exchange (NYMEX). Formerly known as the Commodity Exchange, COMEX is the leading U.S. market for metals futures and options trading
  • Definition Comfort letter Explain securities underwriting agreements to assure that information in the registration statement and prospectus is correctly prepared to the
  • Definition Commercial draft Explain Demand for payment
  • Definition Commercial hedgers Explain in commodities so that they can guarantee prices at which they will buy raw materials or sell their products
  • Definition Commercial loan Explain A short-term loan, typically 90 days, used by a company to finance seasonal working capital needs
  • Definition Commercial property Explain Real estate that produces some sort of income-producing property
  • Definition Commercial risk Explain The risk that a foreign debtor will be unable to pay its debts because of business events, such as bankruptcy
  • Definition Commingling Explain involves mixing customer-owned securities with brokerage firm-owned securities. This process is referred to as rehypothecation, which is
  • Definition Commission Explain trade, based on number of shares, bonds, options, and/or their dollar value. In 1975, deregulation led to the establishment of discount
  • Definition Commission broker Explain who acts as agent for a particular brokerage house and buys and sells stocks for the brokerage house on a commission basis
  • Definition Commission house Explain A firm that buys and sells futures contracts for customer accounts. Related: futures commission merchant, omnibus account
  • Definition Commitment Explain Describes a trader's obligation to accept or make delivery on a futures contract. Related: Open interest
  • Definition Commitment fee Explain return for its legal commitment to lend funds that have not yet been advanced. Often used in risk arbitrage. Payment to institutional
  • Definition Commodity-backed bond Explain A bond with interest payments tied to the price of an underlying commodity
  • Definition Commodity futures contract Explain of a commodity at a specified price on a particular date in the future, allowing a producer to guarantee the price of a product or raw
  • Definition Commodity indexs Explain performance of physical commodities, often by the price of futures contracts for the commodities that are listed on commodity exchanges
  • Definition Common-base-year analysis Explain The representing of accounting information over multiple years as percentages of amounts in an initial year
  • Definition Common code Explain jointly by CEDEL and Euroclear. As of January 1991 common codes replaced the earlier separate CEDEL and Euroclear codes
  • Definition Common market Explain An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services
  • Definition Common shares Explain two types of shares, common and preferred. The common shares usually entitle the shareholders to vote at shareholders meetings. The common
  • Definition Common-size analysis Explain The representing of balance sheet items as percentages of assets and of income statement items as percentages of sales
  • Definition Common-size statement Explain expressed as a percentage of a base figure, useful for purposes of analyzing trends and changing relationship among financial statement
  • Definition Common stock equivalent Explain A convertible security that is traded like an equity issue because the optioned common stock is trading at a high price
  • Definition Common stock fund Explain A mutual fund investing only in common stock
  • Definition Common stock market Explain The market for trading equities, not including preferred stock
  • Definition Common stock/other equity Explain Value of outstanding common shares at par, plus accumulated retained earnings. Also called shareholders' equity
  • Definition Common stock ratios Explain relative claims of stockholders to earnings (cash flow per share), and equity (book value per share) of a firm
  • Definition Companion bonds Explain Obligation (CMO) whose principal is paid off first when the underlying mortgages are prepaid due to falling interest rates. When interest
  • Definition Company Explain A proprietorship, partnership, corporation, or other form of enterprise that engages in business
  • Definition Closely held company Explain controling shareholders. In contrast, a widely-held firm has many shareholders. It is difficult or impossible to wage a proxy battle for
  • Definition Closing price Explain Price of the last transaction of a particular stock completed during a day's trading session on an exchange
  • Definition Closing purchase Explain A transaction in which the purchaser's intention is to reduce or eliminate a short position in a stock, or in a given series of options
  • Definition Closing quote Explain The last bid and offer prices of a particular stock at the close of a day's trading session on an exchange
  • Definition Closing range Explain low prices, or bids and offers, recorded during the period designated as the official close. Related: Settlement price
  • Definition Closing sale Explain A transaction in which the seller's intention is to reduce or eliminate a long position in a stock, or a given series of options
  • Definition Commercial paper Explain issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days
  • Definition Closing transaction Explain sell transaction that eliminates an existing position (selling a long option or buying back a short option). Antithesis of opening
  • Definition Cluster analysis Explain clusters of stocks whose returns are highly correlated within each cluster and relatively uncorrelated across clusters. Cluster analysis
  • Definition CMO REIT Explain Investment Trust investing in the residual cash flows of Collateralized Mortgage Obligation (CMOs). CMO cash_flows are derived from the
  • Definition Coattail investing Explain A risky trading practice of making trades similar to those of other successful investors, usually institutional investors
  • Definition Code of procedure Explain The guide of the National Association of Securities Dealers used to adjudicate complaints filed against NASD members
  • Definition Coefficient of determination Explain relationship between the dependent and independent variables in a regression analysis; for instance, the percentage of variation in the
  • Definition Coffee, Sugar ; Cocoa Exchange (CS;CE) Explain The New York-based commodity exchange trading futures and options. The CS;CE shares the trading floor at the Commodities Exchange Center
  • Definition Coincident indicators Explain Economic indicators that give an indication of the status of the economy
  • Definition Coinsurance effect Explain Refers to the fact that the merger of two firms lessens the probability of default on either firm's debt
  • Definition Cold-calling Explain Calling potential new customers in the hope of selling stocks, bonds or other financial products and receiving commissions
  • Definition Collar Explain An upper and lower limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (ARM
  • Definition Collateral Explain Asset than can be repossessed if a borrower defaults
  • Definition Capitalization rate Explain The rate of interest used to calculate the present value of a number of future payments
  • Definition Collateral trust bonds Explain holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. Compare mortgage bond
  • Definition Collection Explain The presentation of a negotiable instrument for payment, or the conversion of any accounts receivable into cash
  • Definition Collection float Explain The period between the time is deposited a check in an account and the time funds are made available
  • Definition Collection fractions Explain The percentage of a given month's sales collected during the month of sale and each month following the month of sale
  • Definition Collection ratio Explain receivable to its average daily sales, which gives the average number of days it takes the company to convert receivables into cash
  • Definition Collection policy Explain Procedures a firm follows in attempting to collect accounts receivables
  • Definition Collective wisdom Explain The combination of all the individual opinions about a stock's or security's value
  • Definition COLT (Continuous on-line trading system) Explain Computerized OTC traders assistance system that provides for trade entry and position monitoring, among other functions
  • Definition Comanager Explain manager in a syndicated Eurocredit or international bond issue. Comanagers may assist the lead manager bank in the pricing and issue of the
  • Definition Conventional pass-throughs Explain any mortgage pass-through security not guaranteed by government agencies. Compare agency pass-throughs
  • Definition Combination bond + Explain A bond backed by the government unit issuing it as well as by revenue from the project that is to be financed by the bond
  • Definition Combination matching Explain variation of multiperiod immunization and cash flow-matching in which a portfolio is created that is always duration-matched and also cash
  • Definition Combination strategy Explain A strategy in which a put and call with the same strike price and expiration are either both bought or both sold. Related: Straddle
  • Definition Combined financial statement Explain assets, liabilities, net worth, and operating figures of two or more affiliated companies. A combined statement is distinguished from a
  • Definition Come in Explain In the context of general equities, a fall in price
  • Definition Comeout Explain In the context of general equities, the opening. Antithesis of the close
  • Definition Churning Explain Excessive trading of a client's account in order to increase the broker's commissions
  • Definition Cincinnati Stock Exchange (CSE) Explain is the only fully automated stock exchange in the U.S. It has no trading floor, but handles all members' transactions using computers
  • Definition Circle Explain often seek out and circle investor interest in a new issue before final pricing. The customer circled has basically made a commitment to
  • Definition Circuit breakers Explain stop trading temporarily when the market has fallen by a certain percentage in a specified period. They are intended to prevent a market
  • Definition Circus swap Explain A fixed-rate currency swap against floating U.S. dollar LIBOR payments
  • Definition Citizen bonds Explain Certificateless municipals that can be registered on stock exchanges and are listed in newspapers
  • Definition CFTC Explain See: Commodity Futures Trading Commission
  • Definition Claim dilution Explain A decrease in the likelihood that one or more of a firm's claimants will be fully repaid, including time value of money considerations
  • Definition Claimant Explain A party to an explicit or implicit contract
  • Definition Classified stock Explain one class of common stock, usually called Class A and Class B. The specific features of each class, which are set out in the charter and
  • Definition Class action Explain group of lawyers for a group of petitioners with an identical grievance, often with an award proportionate to the number of shareholders
  • Definition Clean Explain block trade that matches buy or sell orders/interests, sparing the block trader any inventory risk (no net position and hence none
  • Definition Clean opinion Explain An auditor's opinion reflecting an unqualified acceptance of a company's financial statements
  • Definition Clean price Explain Bond price excluding accrued interest
  • Definition Clean up Explain purchase/sale of all the remaining supply of stock, or the last piece of a block, in a trade-leaving a net zero position
  • Definition "Clean your skirts" Explain make all your obligated calls ; check with all prior obligations in a security. Often preceded by subject to
  • Definition Clear Explain seller delivering securities and the buyer delivering funds in the proper form. A trade that does not clear is said to fail. Comparison of
  • Definition Clear a position Explain To eliminate a long or short position, leaving no ownership or obligation
  • Definition Clear title Explain any claims on the property or disputed interests, and therefore available for sale. This is usually checked through a title search by a
  • Definition Clearing corporations Explain exchanges and are used to complete securities transactions by taking care of validation, delivery, and settlement
  • Definition Clearing house funds Explain Funds from the Federal Reserve System, requiring three days to clear, that are passed to and from banks
  • Definition Clearinghouse Explain through which transactions executed on its floor are settled by a process of matching purchases and sales. A clearing organization is also
  • Definition Clearing member Explain clearing member must also be a member of the exchange. Not all members of the exchange, however, are members of the clearing organization
  • Definition Clientele effect Explain investments to be followed by groups of investors who have a simular preferences that the firm follow a particular financing policy, such
  • Definition Clone fund Explain A new fund set up in a fund family to emulate another successful fund
  • Definition Close Explain The close is the period at the end of the trading session. Sometimes used to refer to closing price. Related: Opening
  • Definition Close a position Explain eliminate an investment from one's portfolio, by either selling a long position or covering a short position
  • Definition Close market Explain narrow spread between bid and offer prices, due to a high volume of trading and many competing market makers
  • Definition Closed corporation Explain A corporation whose shares are owned by just a few people, having no public market
  • Definition Closed-end management company Explain set number of shares of the mutual fund that it manages, and does not create new shares if demand increases. Antithesis of an open-end
  • Definition Closed-end fund Explain shareslike any other corporation and usually does not redeem its shares. A publicly traded fund sold on stock exchanges or over the counter
  • Definition Closed-end mortgage Explain Mortgage against which no additional debt may be issued
  • Definition Closed fund Explain A mutual fund that is no longer issuing shares, mainly because it has grown too large
  • Definition Closed out Explain Position that is liquidated when the client does not meet a margin call or cover a short sale
  • Definition Closely held Explain A corporation whose voting stock is owned by only a few shareholders
  • Definition Cashier's check Explain A check drawn directly on a customer's account, making the bank the primary obligor, and assuring firms that the amount will be paid
  • Definition Cashout Explain Occurs when a firm runs out of cash and cannot readily sell marketable securities
  • Definition Casualty-insurance Explain Insurance protecting a firm or homeowner against loss of property, damage, and other liabilities
  • Definition Casualty loss Explain A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event
  • Definition Catastrophe call Explain bond because a catastrophe has destroyed the project that provided the revenue source backing the bond
  • Definition Cats and dogs Explain Speculative stocks with short histories of sales, earnings, and dividend payments
  • Definition Caveat emptor, caveat subscriptor Explain Latin expressions for buyer beware and seller beware, which warn of overly risky, inadequately protected markets
  • Definition CEDEL Explain A centralized clearing system for Eurobonds
  • Definition Ceiling Explain The highest price, interest rate, or other numerical factor allowable in a financial transaction
  • Definition Certainty equivalent Explain An amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher, but uncertain, amount
  • Definition Certificate Explain and used as proof of the fact, such as stock certificates, that evidence ownership of stock in a corporation
  • Definition Certified check Explain A bank guaranteed check for which funds are immediately withdrawn, and for which the bank is legally liable
  • Definition Certified Financial Planner (CFP) Explain accredited by the Certified Financial Planner Board of Standards, showing that the person is able to manage a client's banking, estate
  • Definition Certified financial statements Explain Financial statements that include an accountant's opinion
  • Definition Certified Public Accountant (CPA) Explain An accountant who has met certain standards, including experience, age, and licensing, and passed exams in a particular state
  • Definition Chair of the board Explain Highest-ranking member of a Board of Directors, who presides over its meetings and who is often the most powerful officer of a corporation
  • Definition Changes in financial position Explain operations that alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures
  • Definition Characteristic line Explain security; a regression of security returns on the benchmark return. The slope of the regression line is a security's beta
  • Definition Cabinet crowd Explain NYSE members who trade bonds with a low daily traded volume. See: Automated Bond System
  • Definition Cash flow coverage ratio Explain obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest
  • Definition Charitable remainder trust Explain to a designated person or persons until the grantor's death, when the income is passed on to a designated charity. A charitable lead
  • Definition Closing costs Explain All the expenses involved in transferring ownership of real estate
  • Definition Chartered Financial Analyst (CFA) Explain has passed examinations in economics, financial accounting, portfolio management, security analysis, and standards of conduct given by the
  • Definition Chartists Explain patterns of stocks, bonds, and commodities to find trends in patterns of trading used to advise clients. Related: Technical analysts
  • Definition Chasing the market Explain than expected because prices are rapidly climbing, or selling a security at a lower level when prices are quickly falling
  • Definition Chastity bonds Explain Bonds redeemable at par value in the case of a takeover
  • Definition Cheapest to deliver issue Explain the highest implied repo rate; the rate that a seller of a futures contract can earn by buying an issue and then delivering it at the
  • Definition Check Explain A bill of exchange representing a draft on a bank from deposited funds that pays a certain sum of money to a certain person or party
  • Definition Checking the market Explain Searching for bid and offer prices from market makers to find the best deal
  • Definition Chicago Board of Trade (CBOT) Explain The largest futures exchange in the U.S., and was a pioneer in the development of financial futures and options
  • Definition Chicago Stock Exchange (CHX) Explain A major exchange trading only stocks, with 90% of trades taking place on an automated execution system, called MAX
  • Definition Chief Executive Officer (CEO) Explain A title held often by the Chairperson of the Board, or the president. The person principally responsible for the activities of a company
  • Definition Chief Financial Officer (CFO) Explain The officer of a firm is responsible for handling the financial affairs of a company
  • Definition Chief Operating Officer (COO) Explain The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president
  • Definition Chinese hedge Explain securities. Trading hedge in which one is short the convertible and long the underlying common, in the hope that the convertible's
  • Definition Chinese wall Explain financiers at a firm (investment bankers) and traders. This barrier is erected to prevent the sharing of inside information that bankers
  • Definition Choice market Explain Applies mainly to international equities. Locked market in London terminology
  • Definition Cash and equivalents Explain converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government
  • Definition Cash budget Explain A forecasted summary of a firm's expected cash inflows and cash outflows as well as its expected cash and loan balances
  • Definition Cash ; carry Explain Combination of a long position in a stock/index/commodity and short position in the underlying futures, which entails a cost of carry on
  • Definition Cash commodity Explain The actual physical commodity, as distinguished from a futures contract
  • Definition Cash conversion cycle Explain The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable
  • Definition Cash cow Explain earnings per share to stockholders as dividends. Or, a company or division of a company that generates a steady and significant amount of
  • Definition Cash cycle Explain disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable
  • Definition Cash deficiency agreement Explain An agreement to invest cash in a project to the extent required to cover any cash deficiency the project may experience
  • Definition Cash delivery Explain that requires not delivery of underlying assets but settlement according to the cash value of the asset
  • Definition Cash discount Explain An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days
  • Definition Cash dividend Explain 039;s shareholders. The amount is normally based on profitability and is taxable as income. A cash distribution may include capital gains
  • Definition Cash earnings Explain A firm's cash revenues less cash expenses, which excludes the costs of depreciation
  • Definition Cash-equivalent items Explain Examples include Treasury bills and Banker's Acceptances
  • Definition Cash flow Explain earnings before depreciation, amortization, and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds
  • Definition Cash flow break-even point Explain The point below which the firm will need either to obtain additional financing or to liquidate some of its assets to meet its fixed costs
  • Definition Cash flow per common share Explain Cash flow from operations minus preferred stock dividends, divided by the number of common shares outstanding
  • Definition Capital account Explain Net result of public and private international investment and lending activities
  • Definition Cash flow matching Explain this is an alternative to multiperiod immunization that calls for the manager to match the maturity of each element in the liability stream
  • Definition Cash flow from operations Explain directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated
  • Definition Cash flow time line Explain Line depicting the operating activities and cash flows for a firm over a particular period
  • Definition Cash management Explain cash in a business in order to put the cash to work more quickly and to keep the cash in applications that produce income, such as the use
  • Definition Cash management bill Explain Very short-maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days
  • Definition Cash markets Explain Also called spot markets, these are markets that involve the immediate delivery of a security or instrument. Related: Derivative markets
  • Definition Cash offer Explain either hostile or friendly, to acquire a target company through the payment of cash for the stock of the target. Compare to exchange offer
  • Definition Current yield Explain For bonds or notes, the coupon rate divided by the market price of the bond
  • Definition Cash on delivery (COD) Explain In the context of securities, this refers to the practice of institutional investors paying the full purchase price for securities in cash
  • Definition Cash plus convertible Explain Convertible bond that requires cash payment upon conversion
  • Definition Come out of the trade Explain trader's position in a security that results from executing a trade (or the expectations thereof). Antithesis of going into the trade
  • Definition Cash ratio Explain The proportion of a firm's assets held as cash
  • Definition Cash settlement contracts Explain Futures contracts such as stock index futures that settle for cash and do not involve delivery of the underlying
  • Definition Cash-surrender value Explain The amount an insurance company will pay if the policyholder tende4s or cashes in a whole life insurance policy
  • Definition Cash transaction Explain immediate in the form of cash, unlike a forward contract (which calls for future delivery of an asset at an agreed-upon price
  • Definition Cashbook Explain An accounting book that is composed of cash receipts plus disbursements. This balance is posted to the cash account in the ledger
  • Definition Capital-intensive Explain require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit
  • Definition Capital International Indexes Explain Market indexes maintained by Morgan Stanleythat track major stock markets worldwide
  • Definition Capital investment Explain See: Capital expenditure
  • Definition Capital lease Explain A lease obligation that has to be capitalized on the balance sheet
  • Definition Capital loss Explain The difference between the net cost of a security and the net sales price, if the security is sold at a loss
  • Definition Capital market Explain The market for trading long-term debt instruments (those that mature in more than one year
  • Definition Capital market efficiency Explain The degree to which the precent asset price accurately reflects current information in the market place. See: Efficient market hypothesis
  • Definition Capital market imperfections view Explain valuable, but that the firm's optimal choice of capital structure involves various other views of capital structure (net
  • Definition Capital rationing Explain investment undertaken by a firm, either by using a higher cost of capital, or by setting a maximum on the entire capital budget or parts of
  • Definition Capital requirements Explain Financing required for the operation of a business, composed of long-term and working capital plus fixed assets
  • Definition Capital shares Explain purpose investment company, which entitle the holder to the appreciation or depreciation in the value of a portfolio, as well as the gains
  • Definition Common stock Explain ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share
  • Definition Capital structure Explain stockholders' equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities
  • Definition Capital surplus Explain Amounts of directly contributed equity capital in excess of the par value
  • Definition Capital turnover Explain average stockholder equity (net worth). The ratio indicates how much a company could grow its current capital investment level. Low capital
  • Definition Capitalization Explain The debt and/or equity mix that funds a firm's assets
  • Definition Capitalization method Explain portfolio in which the manager purchases a number of the most highly capitalized names in the stock index in proportion to their
  • Definition Capitalization ratios Explain these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity
  • Definition Capitalization table Explain firm, which typically includes the amount of capital obtained from each source - long-term debt and common equity - and the respective
  • Definition Capitalized Explain depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year
  • Definition Capitalized interest Explain Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time
  • Definition Captive finance company Explain A company, usually a subsidiary that is wholly owned, whose main function is financing consumer purchases from the parent company
  • Definition Caput Explain An exotic option. It represents a call option on a put option. That is, you
  • Definition Car Explain describe the amount of a commodity underlying one commodity contract; e.g., a car of bellies. Derived from the fact that quantities of the
  • Definition Carrot equity Explain with the added benefit of an opportunity to purchase more equity if the company reaches certain financial goals
  • Definition Carry Explain Related: Net financing cost
  • Definition Carrying charge Explain The fee a broker charges for carrying securities on credit, such as on a margin account
  • Definition Carrying costs Explain Costs that increase with increases in the level of investment in current assets
  • Definition Carrying value Explain Book value
  • Definition Cartel Explain act together as a single producer to obtain market control and to influence prices in their favor by limiting production of a product. The
  • Definition Cash Explain converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government
  • Definition Cash basis Explain Refers to the accounting method that recognizes revenues and expenses when cash is actually received or paid out
  • Definition Call Explain An option that gives the holder the right to buy the underlying futures contract
  • Definition Call date Explain A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond for a specified call price
  • Definition Call feature Explain Part of the indenture agreement between the bond issuer and buyer describing the schedule and price of redemptions prior to maturity
  • Definition Call loan Explain A loan repayable on demand. Sometimes used as a synonym for broker loan or broker overnight loan
  • Definition Call money rate Explain interest rate that banks charge brokers to finance margin loans to investors. The broker charges the investor the call money rateplus a
  • Definition Call option Explain holder the right (but not the obligation) to purchase a specified number of shares of the underlying stock at the given strike price, on or
  • Definition Call an option Explain To exercise a call option
  • Definition Call premium Explain a bond or share of preferred stock that must be paid to holders to redeem the bond or share of preferred stock before its scheduled
  • Definition Call price Explain The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a specified call date
  • Definition Call protection Explain A feature of some callable bonds that establishes an initial period when the bonds may not be called
  • Definition Call provision Explain An embedded option granting a bond issuer the right to buy back all or part of an issue prior to maturity
  • Definition Call risk Explain The combination of cash flow uncertainty and reinvestment risk introduced by a call provision
  • Definition Call swaption Explain right to enter into a swap as a fixed-rate payer. The writer therefore becomes the fixed-rate receiver/floating-rate payer
  • Definition Callable Explain securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at
  • Definition Called away Explain Convertible: Redeemed before maturity.Option: Call or put option exercised against the stockholder.Sale: Delivery required on a short sale
  • Definition "Can get $xxx" Explain have a buyer who will pay $xxx for the stock . Uusually a standard markdown (1/8) from $xxx is applied to this price in bidding the seller
  • Definition Cancel Explain the floor, or (2) the trader/salesperson's scope. In Autex, the indication still remains on record as having once been placed unless
  • Definition "Cannot compete" Explain cannot accommodate customers at that price level (i.e., compete with other market makers), often because there is no natural opposite side
  • Definition "Cannot complete" Explain inability to finish an order on a principal or agency basis, given prevailing price instructions and/or market conditions
  • Definition Cap Explain An upper limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (ARM
  • Definition Capital allocation decision Explain Allocation of invested funds between risk-free assets and the risky portfolio
  • Definition Capital asset Explain A long-term asset, such as land or a building, not purchased or sold in the normal course of business
  • Definition Capital budget Explain A firm's planned capital expenditures
  • Definition Capital budgeting Explain The process of choosing the firm's long-term capital assets
  • Definition Capital Builder Account (CBA) Explain allows investors to access the loan value of his or her eligible securities to buy or sell securities. Excess cash in a CBA can be invested
  • Definition Capital expenditures Explain Amount used during a particular period to acquire or improve long-term assets such as property, plant, or equipment
  • Definition Capital flight Explain The transfer of capital abroad in response to fears of political risk
  • Definition Capital formation Explain Expansion of capital or capital goods through savings, which leads to economic growth
  • Definition Capital gain Explain capital gain is the difference between the net sales price of the securities and their net cost, or original basis. If a stock is sold
  • Definition Capital gains distribution Explain mutual fund out of profits from selling stocks or bonds, that is subject to capital gains taxes for the shareholders
  • Definition Capital gains tax Explain of capital assets. A long-term capital gain, which is achieved once an asset is held for at least 12 months, is taxed at a maximum rate of
  • Definition Capital gains yield Explain The price change portion of a stock's return
  • Definition Capital goods Explain Goods used by firms to produce other goods, e.g., office buildings, machinery, equipment
  • Definition Certificate of Accrual on Treasury Securities (CATS) Explain issue that is sold at a deep discount from the face value and pays no coupon interest during its lifetime, but returns the full face value
  • Definition Collateralized Bond Obligation (CBO) Explain collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk bond involved. CBOs backed
  • Definition Chicago Board Options Exchange (CBOE) Explain early 1970s for the public trading of standardized option contracts. Primary place stock options, foreign currency options, and index
  • Definition Certificate of deposit (CD) Explain certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A CD has a maturity date and a specified
  • Definition Canadian Dealing Network (CDN) Explain Formerly known as the Canadian Over-the-Counter Automated Trading System (COATS), the CDN became a subsidiary of the Toronto Stock Exchange
  • Definition Commodities Exchange Center (CEC) Explain exchanges: Commodity Exchange, Inc. (COMEX); the New York Mercantile Exchange (NYMEX); New York Cotton Exchange, Coffee, Sugar ;&; Cocoa
  • Definition Canadian Exchange Group (CEG) Explain Toronto Stock Exchange, the Montreal Exchange, the Vancouver Stock Exchange, the Alberta Stock Exchange, and the Winnipeg Stock Exchange
  • Definition CFAT Explain Cash flow after taxes
  • Definition Cash flow after interest and taxes Explain Net income plus depreciation
  • Definition Controlled foreign corporation (CFC) Explain A foreign corporation whose voting stock is more than 50% owned by U.S. stockholders, each of whom owns at least 10% of the voting power
  • Definition Commodity Futures Trading Commission (CFTC) Explain An agency created by the U.S. Congress in 1974 to regulate exchange trading in futures
  • Definition Clearing House Automated Payments System (CHAPS) Explain sterling funds that began operations in 1984. It includes 14 member banks, nearly 450 participating banks, and is one of the clearing
  • Definition Clearing House Electronic Subregister System (CHESS) Explain CHESS is the automatic transfer and settlement system for the majority of Australian Stock Exchange (ASX) listed securities
  • Definition Clearing House Interbank Payments System (CHIPS) Explain An international wire transfer system for high-value payments operated by a group of major banks
  • Definition Commercial Mortgage Backed Securities Explain secured with commercial rather than residential property. Commercial property includes multi-family, retail, office, etc., They are not
  • Definition Chicago Mercantile Exchange (CME) Explain its members. Its primary functions are to provide a location for trading futures and options, to collect and disseminate market information
  • Definition Capital market line (CML) Explain of the risk-free asset and the market portfolio. The line represents the risk premium you earn for taking on extra risk. Defined by the
  • Definition Collateralized mortgage obligation (CMO) Explain through rates , structured so that there are several classes of bondholders with varying maturities, called tranches. The principal
  • Definition Cumulative Translation Adjustment (CTA) account Explain in which gains and/or losses from translation have been accumulated over a period of years. The C.T.A. account is required under the FASB
  • Definition Committee on Uniform Securities Identification Procedures (CUSIP) Explain numbers and codes for all securities. These CUSIP numbers and symbols are used when recording all buy or sell orders
  • Definition Commodity Explain A commodity is food, metal, or another fixed physical substance that investors buy or sell, usually via futures contracts
  • Definition Cabinet security Explain A stock or bond listed on a major exchange with low daily traded volume
  • Definition Cable Explain Exchange rate between British pound sterling and the U.S. dollar
  • Definition CAC 40 index Explain composed of 40 of the 100 largest companies listed on the forward segment of the official list of the Paris Bourse
  • Definition Cage Explain A section of a brokerage firm used for receiving and disbursing funds
  • Definition Calendar Explain List of new issues scheduled to come to market shortly
  • Definition Calendar effect Explain perform differently at different times, including preformance anomalies like the January effect, month-of-the-year effect, day-of-the-week
  • Definition Calendar spread Explain strategy in which there is a simultaneous purchase and sale of options of the same class at different strike prices, but with the same
  • Definition C Explain Fifth letter of a Nasdaq stock descriptor specifying that issue is exempt from Nasdaq listing requirements for a temporary period
  • Definition Cumulative Auction Market Preferred Stocks (CAMPS) Explain Stands for Cumulative Auction Market Preferred Stocks, Oppenheimer & Company's Dutch Auction preferred stock product
  • Definition Capital asset pricing model (CAPM) Explain relationship between risk and expected return, and serves as a model for the pricing of risky securities. The CAPM asserts that the only
  • Definition Convertible adjustable preferred stock (Caps) Explain and is pegged to Treasury security rates. They can be exchanged at par value for common stock or cash after the next period's
  • Definition Certificates of Automobile Receivables (CAR) Explain Pass-through securities backed by automobile loan receivables
  • Definition Certificates of Amortized Revolving Debt (CARD) Explain Pass-through securities backed by credit card receivables

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Certificates Of Amortized Revolving Debt (Card), Certificates Of Automobile Receivables (Car), Convertible Adjustable Preferred Stock (Caps), Capital Asset

Certificates Of Amortized Revolving Debt (Card