| C | Fifth letter of a Nasdaq stock descriptor specifying that issue is exempt from Nasdaq listing requirements for a temporary period. |
| C Corporation | A corporation that elects to be taxed as a corporation. The C corporation pays federal and state income taxes on earnings. When the earnings are distributed to the shareholders as dividends, this income is subject to another round of taxation (shareholder's income). Essentially, the C corporations' earnings are taxed twice. In contrast, the S corporation's earnings are taxed only once. |
| CA | The two-character ISO 3166 country code for CANADA. |
| Cabinet crowd | NYSE members who tradebonds with a low daily traded volume. See: Automated Bond System. |
| Cabinet security | A stock or bond listed on a major exchange with low daily tradedvolume. |
| Cable | Exchange rate between British pound sterling and the U.S. dollar. |
| CAC 40 index | A broad-basedindex of common stocks composed of 40 of the 100 largest companies listed on the forward segment of the official list of the Paris Bourse. |
| CAD | The ISO 4217 currency code for Canada Dollar. |
| CADS | See Cash Available for Debt Service. |
| Cage | A section of a brokerage firm used for receiving and disbursing funds. |
| CAGR | See: Compound Annual Growth Rate |
| Calendar | List of new issues scheduled to come to market shortly. |
| Calendar effect | Describes the tendency of stocks to perform differently at different times. For example, a number of researchers have documented that historically, returns tend to be higher in January compared to other months (especially February). Others have documented returns patterns across days of the week and within the day. Some of these patterns are found in volume and volatility as well as returns. |
| Calendar spread | Applies to derivative products. A strategy in which there is a simultaneous purchase and sale of options of the same class at the same strike prices, but with different expiration date. |
| Calendar Straddle or Combination | See Calendar Spread. |
| Call | An option that gives the holder the right to buy the underlying asset. |
| Call an option | To exercise a call option. |
| Call date | A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond for a specified call price. |
| Call feature | Part of the indenture agreement between the bondissuer and buyer describing the schedule and price of redemptions prior to maturity. |
| Call loan | A loan repayable on demand. Sometimes used as a synonym for broker loan or broker overnight loan. |
| Call loan rate | See: Call money rate |
| Call money rate | Also called the broker loan rate , the interest rate that banks charge brokers to financemarginloans to investors. The broker charges the investor the call money rate plus a service charge. |
| Call option | A contract permitting but not requiring the holder of the benefit of it to buy an asset (often property) at a time in the future at a price agreed at the time the option is granted. Exercise of it may be conditional on events occurring, for example the grant of planning permission. |
| Call option | An optioncontract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlyingstock at the given strike price, on or before the expiration date of the contract. |
| Call premium | Premium in price above the par value of 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 maturity date. |
| Call price | The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a specified call date. |
| Call protection | A feature of some callablebonds that establishes an initial period when the bonds may not be called. |
| Call provision | An embedded option granting a bondissuer the right to buy back all or part of an issue prior to maturity. |
| Call risk | The combination of cash flow uncertainty and reinvestment risk introduced by a call provision. |
| Call swaption | A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The writer therefore becomes the fixed-rate receiver/floating-rate payer. |
| Callability | Feature of a security that allows the issuer to redeem the security prior to maturity by calling it in, or forcing the holder to sell it back. |
| Callable | Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. Bonds are usually called when interest rates fall so significantly that the issuer can save money by issuing new bonds at lower rates. |
| Called away | Convertible: Redeemed before maturity. Option: Call or put optionexercised against the stockholder. Sale: Delivery required on a short sale. |
| CAMPS | See: Cumulative Auction Market Preferred Stocks |
| Canadian agencies | Agency banks established by Canadian Banks in the U.S. |
| Canadian Dealing Network (CDN) | The organized OTC market of Canada. Formerly known as the Canadian Over-the-Counter Automated Trading System (COATS), the CDN became a subsidiary of the Toronto Stock Exchange in 1991. |
| Cancel | To void an order to buy or sell from (1) the floor, or (2) the trader/salesperson's scope. In Autex, the indication still remains on record as having once been placed unless it is expunged. |
| Canceled Certificates | Before the issuance of a new certificate, the old certificate is presented to the Transfer Agent and is canceled. |
| Cap | An arrangement setting an upper limit on the interest rate payable by a borrower on a floating rate loan. If the interest rate goes above the upper limit, the person providing the cap reimburses the borrower for the amount above that upper limit. The borrower will pay a premium for the cap. See also collar. |
| Cap | An upper limit on the interest rate on a floating-rate note (FRN) or an adjustable-rate mortgage (ARM). Also, an OTC derivatives contract consisting of a series of European interest rate call options; used to protect an issuer of floating-rate debt from interest rate increases. Each individual call option within the cap is called a caplet. Opposite of a floor. |
| Capacity | Creditgrantors' measurement of a person's ability to repay loans. |
| Capacity utilization rate | The percentage of the economy's total plant and equipment that is currently in production. Usually, a decrease in this percentage signals an economic slowdown, while an increase signals economic expansion. |
| Capex | See: Capital expenditures |
| Capital | Moneyinvested in a firm. |
| Capital account | Net result of public and private international investment and lending activities. |
| Capital adequacy | Requirements imposed on banks by the supervising authorities to maintain specified ratios of capital to their assets and liabilities. |
| Capital allocation decision | Allocation of invested funds between risk-free assets and the riskyportfolio. |
| Capital allowances | Tax relief claimed on the capital cost of acquiring a qualifying asset. It may be offset against a taxpayer’s income liable to corporation tax or income tax. There are various forms of capital allowance. Most common are allowances for plant and machinery, industrial buildings, hotels, commercial buildings in enterprise zones, scientific research and mineral extraction. There are detailed rules governing the rates of capital allowances and how they are applied. They may be subject to clawback as a result of a balancing adjustment when the taxpayer disposes of the asset. |
| Capital appreciation | See: Capital growth |
| Capital appreciation fund | See: Aggressive growth fund |
| Capital asset | A long-termasset, such as land or a building, not purchased or sold in the normal course of business. |
| Capital asset pricing model (CAPM) | An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of riskysecurities. The CAPM asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The CAPM says that the expected return of a security or a portfolio is equal to the rate on a risk-free security plus a risk premium multiplied by the asset's systematic risk. Theory was invented by William Sharpe (1964) and John Lintner (1965). The early work of Jack Treynor is was also instrumental in the development of this model. |
| Capital budget | A firm's planned capital expenditures. |
| Capital budgeting | The process of choosing the firm'slong-termassets. |
| Capital Builder Account (CBA) | A Merrill Lynch brokerage account that 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 in a money market fund or an insuredmoney market deposit account without losing access to the money. |
| Capital expenditures | Amount used during a particular period to acquire or improve long-termassets such as property, plant, or equipment. |
| Capital flight | The transfer of capital abroad in response to fears of political risk. |
| Capital formation | Expansion of capital or capital goods through savings, which leads to economic growth. |
| Capital gain | When a stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their netcost, or original basis. If a stock is sold below cost, the difference is a capital loss. |
| Capital gains distribution | A distribution to the shareholders of a mutual fund out of profits from selling stocks or bonds, that is subject to capital gains taxes for the shareholders. |
| Capital gains tax | The tax levied on profits from the sale of capital assets. A long-termcapital gain, which is achieved once an asset is held for at least 12 months, is taxed at a maximum rate of 20% (taxpayers in 28% tax bracket) and 10% (taxpayers in 15% tax bracket). Assets held for less than 12 months are taxed at regular income tax levels, and, since January 1, 2000, assets held for at least five years are taxed at 18% and 8%. |
| Capital gains yield | The price change portion of a stock's return. |
| Capital goods | Goods used by firms to produce other goods, e.g., office buildings, machinery, equipment. |
| Capital growth | The increase in an asset'smarket price. Also called capital appreciation. |
| Capital infusion | Often refers to the cross-subsidization of divisions within a firm. When one division is not doing well, it might benefit from an infusion of new funds from the more successful divisions. In the context of venture capital, it can also refer to funds received from a venture capitalist to either get the firm started or to save it from failing due to lack of cash. |
| Capital International Indexes | Market indexes maintained by Morgan Stanley that track major stock markets worldwide. |
| Capital investment | See: Capital expenditure. |
| Capital lease | A leaseobligation that has to be capitalized on the balance sheet. |
| Capital loss | The difference between the netcost of a security and the sales price, if the security is sold at a loss. Also used in a more general context to refer to the market for stocks, bonds, derivatives and other investments. |
| Capital market | Traditionally, this has referred to the market for trading long-termdebt instruments (those that mature in more than one year). That is, the market where capital is raised. More recently, capital markets is used in a more general context to refer to the market for stocks, bonds, derivatives and other investments. |
| Capital market efficiency | The degree to which the present asset price accurately reflects current information in the market place. See: Efficient market hypothesis. |
| Capital market imperfections view | The view that issuingdebt is generally valuable, but that the firm's optimal choice of capital structure involves various other views of capital structure ( net corporate/personal tax, agencycost, bankruptcy cost, and pecking order), that result from considerations of asymmetric information, asymmetric taxes, and transaction costs. |
| Capital market line (CML) | The line defined by every combination 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 capital asset pricing model. |
| Capital rationing | Placing limits on the amount of new 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 it. |
| Capital requirements | Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. |
| Capital shares | One of two types of shares in a dual-purpose investmentcompany, which entitle the holder to the appreciation or depreciation in the value of a portfolio, as well as the gains from trading in the portfolio. Antithesis of income shares. |
| Capital stock | Stock authorized by a firm'scharter and having par value, stated value, or no par value. The number and the value of issued shares are usually shown, together with the number of shares authorized, in the capital accounts section of the balance sheet. See: Common stock. |
| Capital structure | The makeup of the liabilities and stockholders'equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and longmaturities. |
| Capital surplus | Amounts of directly contributed equitycapital in excess of the par value. |
| Capital turnover | Calculated by dividing annual sales by average stockholderequity (net worth). The ratio indicates how much a company could grow its current capital investment level. Low capital turnover generally corresponds to high profit margins. |
| Capital-intensive | Used to describe industries that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive. |
| Capitalization | The debt and/or equity mix that funds a firm'sassets. |
| Capitalization method | A method of constructing a replicating portfolio in which the manager purchases a number of the most highly capitalized names in the stockindex in proportion to their capitalization. |
| Capitalization rate | The interest rate used to calculate the present value of a number of future payments. |
| Capitalization ratios | Also 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 ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow. |
| Capitalization table | A table showing the capitalization of a firm, which typically includes the amount of capital obtained from each source - long-termdebt and common equity - and the respective capitalization ratios. |
| Capitalization-Weighted Index | A stock index which is computed by adding the capitalization (float times price) of each individual stock in the index, and then dividing by the divisor. The stocks with the largest market values have the heaviest weighting in the index. See also Float, Divisor. |
| Capitalized | Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. |
| Capitalized interest | Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. |
| CAPM | See: Capital asset pricing model |
| 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. |
| CAPS | See: Convertible adjustable preferred stock |
| Captive finance company | A company, usually a subsidiary that is wholly owned, whose main function is financing consumer purchases from the parent company. |
| Caput | An exotic option. It represents a call option on a put option. That is, you purchase the option to buy a put option at a particular price on or before the expiration date. |
| Car | A loose quantity term sometimes used to describe the amount of a commodityunderlying one commoditycontract; e.g., "a car of bellies." Derived from the fact that quantities of the product specified in a contract once corresponded closely to the capacity of a railroad car. |
| Caracas Stock Exchange | Originally established in 1947 and merged with a competitor in 1974 to become the only securities exchange of Venezuela. |
| CARDs | See: Certificates of Amortized Revolving Debt |
| Cargo | Goods being transported. |
| Carriage and Insurance Paid To (CIP) | Seller is responsible for the payment of freight to carry goods to a named overseas destination. The seller is also responsible for providing cargo insurance at minimum coverage against the buyer's risk of loss or damage to the goods during transport. The risk of loss or damage is transferred from the seller to the buyer once the goods are delivered into the carrier's custody. This term may be used for any mode of transport. |
| Carriage Paid To (CPT) | Seller is responsible for the payment of freight to carry goods to a named overseas destination. The risk of loss or damage is transferred from the seller to the buyer when the goods have been delivered into the carrier's custody. This term may be used for any mode of transport. |
| Carried interest | A profit share that rewards the financier or principal motivator of a venture over and above the return on its financial contribution. |
| Carrot equity | British slang for an equityinvestment with the added benefit of an opportunity to purchase more equity if the company reaches certain financial goals. |
| Carry | Related: Net financing cost. |
| Carry Trade | A trade where you borrow and pay interest in order to buy something else that has higher interest. For example, with a positively sloped term structure (short rates lower than long rates), one might borrow at low short term rates and finance the purchase of long-term bonds. The carry return is the coupon on the bonds minus the interest costs of the short-term borrowing. Of course, if long-term interest rates unexpectedly rose(and long-term bond prices fell as a result), the carry trade could become unprofitable. Indeed, if this occured, there could be a number of investors trying to unwind the carry trade, which would involve selling the long-term bonds. It is possible that this could exacerbate the increase in long-term interest rates, i.e. push the rates even higher. Related: Currency Carry Trade. |
| Carryforwards | Tax losses allowed to be applied to offset future income in some specified number of future years. |
| Carrying charge | The fee a broker charges for carryingsecurities on credit, such as on a margin account. Also, any component of a futures basis, such as storage costs, interest charges or insurance costs on the underlying interest. |
| Carrying costs | Costs that increase with increases in the level of investment in current assets. |
| Carrying value | Book value. |
| CARs | See: Certificates of Automobile Receivables |
| Cartel | A group of businesses or nations that act together as a single producer to obtain marketcontrol and to influence prices in their favor by limiting production of a product. The United States has laws prohibiting cartels. |
| Carve out | Usually occurs when a company decides to IPO one of their subsidiaries or divisions. The company usually only offers a minority share to the equity market. Also known as equity carve out. |
| Cash | The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and banker's acceptances. Cash equivalents on balance sheets include securities that mature within 90 days (e.g., notes). |
| Cash & carry | Applies to derivative products. Combination of a long position in a stock/index/commodity and short position in the underlyingfutures, which entails a cost of carry on the long position. Also known as cash and carry arbitrage. |
| Cash account | A brokerage account that settles transactions on a cash-rather than credit-basis. |
| Cash and equivalents | The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as bonds and Banker's Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within 90 days. |
| Cash asset ratio | Cash and marketable securities divided by current liabilities. See: Liquidity ratios. |
| Cash Available for Debt Service | Ratio of cash assets to debt service (interest plus nearby principal). Used in evaluating the risk of a project or firm. The higher the ratio the less likely the firm or project will fail to meet its debt obligations. |
| Cash basis | Refers to the accounting method that recognizes revenues and expenses when cash is actually received or paid out. |
| Cash budget | A forecasted summary of a firm's expected cash inflows and cash outflows as well as its expected cash and loan balances. |
| Cash commodity | The actual physical commodity, as distinguished from a futures contract. |
| Cash conversion cycle | The length of time between a firm'spurchase of inventory and the receipt of cash from accounts receivable. |
| Cash cow | A company that pays out most of its earnings per share to stockholders as dividends. Or, a company or division of a company that generates a steady and significant amount of free cash flow. |
| Cash cycle | In general, the time between cash disbursement and cash collection. In networking capital management, it can be thought of as the operating cycle less the accounts payable payment period. |
| Cash deficiency agreement | An agreement to investcash in a project to the extent required to cover any cash deficiency the project may experience. |
| Cash delivery | The provision of some futures contracts that requires not delivery of underlying assets but settlement according to the cash value of the asset. |
| Cash discount | An incentive offered to purchasers of a firm's product for payment within a specified time period, such as ten days. |
| Cash dividend | A dividend paid in cash to a company'sshareholders. The amount is normally based on profitability and is taxable as income. A cashdistribution may include capital gains and return of capital in addition to the dividend. |
| Cash earnings | A firm'scash revenues less cash expenses, which excludes the costs of depreciation. |
| Cash flow | In investments, cash flow represents earnings before depreciation, amortization, and non-cash charges. Sometimes called cash earnings. Cash flow from operations (called funds from operations by real estate and other investment trusts) is important because it indicates the ability to pay dividends. |
| Cash flow after interest and taxes | Net income plus depreciation. |
| Cash flow break-even point | 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. |
| Cash flow coverage ratio | The number of times that financial obligations (for interest, principal payments, preferred stockdividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation. |
| Cash flow from operations | A firm'snetcash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuingsecurities), calculated as the sum of net income plus noncash expenses that are deducted in calculating net income. |
| Cash flow matching | Also called dedicating a portfolio, this is an alternative to multiperiod immunization that calls for the manager to match the maturity of each element in the liability stream, working backward from the last liability to assure all required cash flows. |
| Cash flow per common share | Cash flow from operations minus preferred stockdividends, divided by the number of common sharesoutstanding. |
| Cash flow time line | Line depicting the operating activities and cash flows for a firm over a particular period. |
| Cash in Advance | A payment term meaning the buyer pays the seller before shipment is effected. |
| Cash In Lieu (CIL) | In a typical exchange offer, "old" shares of the target company are exchanged for "new shares". |
| Cash investments | Short-termdebt instruments—such as commercial paper, banker's acceptances, and Treasury bills—that mature in less than one year. Also known as money marketinstruments or cash reserves. |
| Cash management | Refers to the efficient management of 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 of lock boxes for payments. |
| Cash management bill | Very short-maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days. |
| Cash markets | Also called spot markets, these are markets that involve the immediate delivery of a security or instrument. Related: Derivative markets. |
| Cash offer | Often used in risk arbitrage. Proposal, either hostile or friendly, to acquire a target company through the payment of cash for the stock of the target. Compare to exchange offer. |
| Cash on delivery (COD) | In the context of securities, this refers to the practice of institutional investors paying the full purchase price for securities in cash. |
| Cash plus convertible | Convertible bond that requires cash payment upon conversion. |
| Cash position | The percentage of a mutual fund'sassetsinvested in short-termreserves, such as US Treasury bills or other money marketinstruments. |
| Cash price | Applies to derivative products. See: Spot price. |
| Cash ratio | The proportion of a firm'sassets held as cash. |
| Cash reserves | See: Cash investments |
| Cash sale/settlement | Transaction in which a contract is settled on the same day as the trade date, or the next day if the trade occurs after 2:30 p.m. EST and the parties agree to this procedure. Often occurs because a party is strapped for cash and cannot wait until the regular three-business daysettlement. See: Settlement date. |
| Cash Settlement | The process by which the terms of an option contract are fulfilled through the payment or receipt in dollars of the amount by which the option is in-the-money as opposed to delivering or receiving the underlying stock. |
| Cash settlement contracts | Futures contracts such as stock indexfutures that settle for cash and do not involve delivery of the underlying. |
| Cash transaction | A transaction in which exchange is immediate in the form of cash, unlike a forward contract (which calls for future delivery of an asset at an agreed-upon price). |
| Cashbook | An accounting book that is composed of cash receipts plus disbursements. This balance is posted to the cash account in the ledger. |
| Cashed-Based | Refering to an option or future that is settled in cash when exercised or assigned. No physical entity, either stock or commodity, is received or delivered. |
| Cash-equivalent items | Examples include Treasury bills and Banker's Acceptances. |
| Cashier's check | A check drawn directly on a customer's account, making the bank the primary obligor, and assuring firm that the amount will be paid. |
| Cash-on-cash return | A method used to find the return on investments when there is no activesecondary market. The yield is determined by dividing the annual cash income by the total investment. See: Current yield or yield to maturity. |
| Cashout | Occurs when a firm runs out of cash and cannot readily sell marketable securities. |
| Cash-out Laws | These laws enable shareholders to sell their stakes to a "controlling" shareholder at a price based on the highest price of recently acquired shares. This works something like Fair-Price provisions extended to nontakeover situations. A few states have these laws. |
| Cash-surrender value | The amount an insurance company will pay if the policyholdertenders or cashes in a whole life insurance policy. |
| Casualty loss | A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event. |
| Casualty-insurance | Insurance protecting a firm or homeowner against loss of property, damage, and other liabilities. |
| Catastrophe call | Early redemption of a municipal revenue bond because a catastrophe has destroyed the project that provided the revenue source backing the bond. |
| CATS | See: Certificate of Accrual on Treasury Securities (CATS) |
| Cats and dogs | Speculative stocks with short histories of sales, earnings, and dividend payments. |
| Caution | The procedure for registering a third party’s interest in registered land at HM Land Registry usually without the consent of the owner. A caution puts others on notice of the interest of the person who registered it. Cautions need to be registered with care as there is a liability for damages if registered without cause or if not removed when the reason for registration no longer exists. If a third party’s interest is to be registered with the owner’s consent the normal procedure is to register a notice. |
| Caveat emptor, caveat subscriptor | Latin expressions for "buyer beware" and "seller beware," which warn of overly risky, inadequately protectedmarkets. |
| CAX | The ISO 4217 currency code for Canadian Cent. |
| CBD | See: Cash In Advance. |
| CBO | See: Collateralized Bond Obligation. |
| CBOE | See: Chicago Board Options Exchange |
| CC | The two-character ISO 3166 country code for COCOS (KEELING) ISLANDS. |
| CD | See: Certificate of deposit |
| CD | The two-character ISO 3166 country code for CONGO, THE DEMOCRATIC REPUBLIC OF. |
| CDC | See: Commonwealth Development Corp |
| CDN | See: Canadian Dealing Network |
| CDO | See: Collateralized Debt Obligation. |
| Cease-and-desist order | An order issued after notice and opportunity for hearing, requiring a depository institution, a holding company or a depository institution official to terminate unlawful, unsafe or unsound banking practices. Cease-and-desist orders are issued by the appropriate federal regulatory agencies under the Financial Institutions Supervisory Act and can be enforced directly by the courts. |
| CEC | See: Commodities Exchange Center |
| Cede & Co. | Nominee name for The Depository Trust Company, a large clearing house that holds shares in its name for banks, brokers and institutions in order to expedite the sale and transfer of stock. |
| CEDEL | A centralized clearing system for Eurobonds. |
| Ceiling | See cap. |
| Ceiling | The highest price, interest rate, or other numerical factor allowable in a financial transaction. |
| Central bank | A country's main bank whose responsibilities include the issue of currency, the administration of monetary policy, open market operations, and engaging in transactions designed to facilitate healthy business interactions. See: Federal Reserve System. |
| Central bank intervention | The buying or selling of currency, foreign or domestic, by central banks in order to influence market conditions or exchange rate movements. |
| Central Limit Theorem | The Law of Large Numbers states that as a sample of independent, identically distributed random numbers approaches infinity, its probability density function approaches the normal distribution. See: Normal Distribution. |
| Centralized cash flow management | Provision of consolidated cash management decisions to all MNCunits from one location, usually at the parent's headquarters. |
| Cents per share | The amount of a mutual fund'sdividend or capital gainsdistributions that a shareholder will receive for each share owned. |
| Certainty equivalent | An amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher, but uncertain, amount. |
| Certainty Equivalent Return | The certain (zero risk) return an investor would trade for a given (larger) return with an associated risk. For example, a particular investor might trade an uncertain expected 4% activereturn with 6% risk, for a certain active return of 1.5%. Used as a way to incorporate individual investor risk tolerances into financial decisions. |
| Certificate | A formal document used to record a fact and used as proof of the fact, such as stock certificates, that evidence ownership of stock in a corporation. |
| Certificate of Accrual on Treasury Securities (CATS) | Refers to a zero-coupon US Treasuryissue that is sold at a deep discount from the face value and pays no couponinterest during its lifetime, but returns the full face value at maturity. |
| Certificate of deposit | A savings deposit that cannot be withdrawn before the stated maturity date. |
| Certificate of deposit (CD) | Also called a time deposit this is a certificateissued by a bank or thrift that indicates a specified sum of money has been deposited. A CD has a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years. |
| Certificate of non-crystallisation | Evidence that a floating charge has not crystallised, so permitting disposal of the company’s assets in the ordinary course of its business. |
| Certificate of Origin | A document certifying the country of origin for goods sold internationally. |
| Certificate of title | A certificate often in the form of a letter addressed to the lender from solicitors acting for the borrower confirming the status of a legal title to be charged to the lender from investigations carried out by the borrower’s solicitors. The certificate should contain reference to the title to the property being ‘good and marketable’. To be contrasted with a report on title which is a report on similar matters but prepared by solicitors acting for a borrower or lender for their own client. |
| Certificateless municipals | Municipal bonds with one certificate which is valid for the entire issue, and having no individual certificates, easing transactions. See: Book-entry securities. |
| Certificates of Amortized Revolving Debt (CARD) | Pass-through securities backed by credit card receivables. |
| Certificates of Automobile Receivables (CAR) | Pass-through securities backed by automobile loan receivables. |
| Certified check | A bank guaranteedcheck for which funds are immediately withdrawn, and for which the bank is legally liable. |
| Certified Financial Planner (CFP) | A person who has passed examinations accredited by the Certified Financial Planner Board of Standards, showing that the person is able to manage a client's banking, estate, insurance, investment, and tax affairs. |
| Certified financial statements | Financial statements that include an accountant's opinion. |
| Certified Public Accountant (CPA) | An accountant who has met certain standards, including experience, age, and licensing, and passed exams in a particular state. |
| CF | The two-character ISO 3166 country code for CENTRAL AFRICAN REPUBLIC. |
| CFAT | Cash flow after taxes. |
| CFAT | See: Cash flow after taxes |
| CFC | See: Controlled foreign corporation |
| CFR | See: Cost and Freight |
| CFTC | See: Commodity Futures Trading Commission |
| CG | The two-character ISO 3166 country code for The Congo. |
| CH | The two-character ISO 3166 country code for SWITZERLAND. |
| Chair of the board | Highest-ranking member of a Board of Directors, who presides over its meetings and who is often the most powerful officer of a corporation. |
| Changes in financial position | Sources and uses of funds provided from operations that alter a company'scash flowposition: depreciation, deferred taxes, other sources, and capital expenditures. |
| Chaos | A deterministic non-linear dynamic system that can produce random looking results. A chaotic system must have a fractal dimension, and exhibit sensitive dependence on initial conditions. See: Fractal Dimension, Lyapunov Exponent, Strange Attractor. |
| CHAP | See: Clearing House Automated Payments System |
| CHAPS | Clearing Houses Automated Payment System. The principal means of electronic transfer of funds. |
| Chapter 11 Proceedings | Provisions of the Bankruptcy Reform Act under which the debtorfirm is reorganized by a court because the estimated value of the reorganized firm exceeds the expected proceeds from its liquidation. |
| Chapter 7 Proceedings | Provisions of the Bankruptcy Reform Act under which the debtorfirm'sassets are liquidated by a court because reorganization would fail to establish a profitable business. |
| Characteristic line | The market model applied to a single security; a regression of security returns on the benchmark return. The slope of the regression line is a security's beta. |
| Characteristic portfolio | A portfolio which efficiently represents a particular asset characteristic. For a given characteristic, it is the minimum risk portfolio, with portfolio characteristic equal to 1. For example, the characteristic portfolio of assetbetas is the benchmark. It is the minimum risk beta = 1 portfolio. |
| Charge | The document evidencing mortgagesecurity required by Crown Law (law derived from English law). A Fixed Charge refers to a defined set of assets and is usually registered. A Floating Charge refers to other assets which change from time to time (ie. cash, inventory, etc.), which become a Fixed Charge after a default. |
| Charge off | See: Bad debt |
| Charitable remainder trust | An irrevocable trust that pays income to a designated person or persons until the grantor's death, when the income is passed on to a designated charity. A charitable lead trust by contrast allows the charity to receive income during the grantor's life, and the remaining income to pass to designated family members upon the grantor's death. |
| Charter | See: Articles of incorporation |
| Charter Amendment Limitations | These provisions limit shareholders' ability to amend the governing documents of the corporation. This might take the form of a supermajority vote requirement for charter or bylaw amendments, total elimination of the ability of shareholders to amend the bylaws, or the ability of directors beyond the provisions of state law to amend the bylaws without shareholder approval. |
| Chartered Financial Analyst (CFA) | An experienced financial analyst who has passed examinations in economics, financial accounting, portfolio management, security analysis, and standards of conduct given by the Institute of Chartered Financial Analysts. |
| Chartists | A technical analyst who charts the patterns of stocks, bonds, and commodities to find trends in patterns of trading used to advise clients. Related: Technical analysts. |
| Chasing the market | Purchasing a security at a higher price than expected because prices are rapidly climbing, or selling a security at a lower level when prices are quickly falling. |
| Chastity bonds | Bondsredeemable at par value in the case of a takeover. |
| Chattel Mortgage | A loan agreement that grants to the lender a lien on property other than real estate. Chattel is personal or movable property. |
| Chatter | See: Whipsawed |
| Cheapest to deliver issue | The acceptable Treasury security with 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 settlement date. |
| Check | 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. |
| Check clearing | The movement of a check from the depository institution at which it was deposited back to the institution on which it was written; the movement of funds in the opposite direction and the corresponding credit and debit to the involved accounts. The Federal Reserve operates a nationwide check-clearing system. |
| Checking the market | Searching for bid and offer prices from market makers to find the best deal. |
| Checkwriting | Free checkwriting privileges offered with nonretirement accounts for select mutual funds. |