A comprehensive A-to-Z listing of 2,500 financial terms
- Exchange rate between British pounds sterling and the U.S.$.
- List of new issues scheduled to
come to market shortly.
- Calendar effect
- The tendency of stocks to perform
differently at different times, including such anomalies as the
January effect, month-of-the-year effect, day-of-the-week effect,
and holiday effect.
- An option that gives the right to
buy the underlying futures
- Call an option
- To exercise a
- 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 money rate
- Also called the broker loan
rate , the interest rate that
banks charge brokers to finance margin
loans to investors. The broker charges the
call money rate
plus a service charge.
- Call option
- An option
contract that gives its 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 before the
expiration date of the
- 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 callable bonds that establishes an initial
period when the bonds may not be called.
- Call price
- The price for which a bond can be repaid
before maturity under a
- Call provision
- An embedded option
granting a bond issuer the right to buy back all or part of the
issue prior to maturity.
- Call risk
- The combination of cash flow
uncertainty and reinvestment
risk introduced by a call
- 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.
- A financial security such as a bond with a call
option attached to it, i.e., the issuer has the right to call the
- Canadian agencies
- Agency banks established by Canadian banks in the U.S.
- An upper limit on the
interest rate on a (FRN)
- Money invested in a firm.
- Capital account
- Net result of public and private international investment and
- Capital allocation decision
- Allocation of invested funds between
risk-free assets versus the risky portfolio.
- 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 risky securities.
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
- Capital budget
- A firm's set of planned
- Capital budgeting
- The process of choosing the firm's
long-term capital assets.
- Capital expenditures
- Amount used during a particular period to acquire or improve
long-term assets such as
property, plant or equipment.
- Capital flight
- The transfer of capital abroad in
response to fears of political risk.
- Capital gain
- When a stock is sold for a profit, it's the difference between
the net sales price of securities and their net cost, or original
basis. If a stock is sold below cost,
the difference is a capital loss.
- Capital gains yield
- The price change portion of a stock's return.
- Capital lease
- A lease obligation that has to be
capitalized on the balance sheet.
- Capital loss
- The difference between the net cost of a
security and the net sale price, if that
security is sold at a loss.
- Capital market
- The market for trading long-term
debt instruments (those that mature in more than one year).
- Capital market efficiency
- Reflects the relative amount of wealth wasted in making transactions.
An efficient capital market allows the transfer of assets with little
wealth loss. See:
efficient market hypothesis.
- Capital market imperfections view
- The view that issuing debt is generally valuable
but that the firm's optimal choice of
capital structure is a dynamic process that involves the other
views of capital structure (net corporate/personal tax, agency cost, bankruptcy cost, and pecking order), which 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
- Capital rationing
- Placing one or more 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 parts of, and/or the entirety of, the
- 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 long maturities.
- Capital surplus
- Amounts of directly contributed
equity capital in excess of the
- The debt and/or
equity mix that fund a firm's
- Capitalization method
- A method of constructing a replicating
portfolio in which the manager
purchases a number of the largest-capitalized names in the index
stock in proportion to their
- 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-term debt and
common equity - and the respective
- Recorded in asset accounts and
then depreciated or amortized, as is appropriate for expenditures for
items with useful lives greater 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.
- A loose quantity term sometimes used to describe a the amount of
a commodity underlying one commodity contract; e.g., "a car of bellies."
Derived from the fact that quantities of the product specified in a
contract used to correspond closely
to the capacity of a railroad car.
- Certificates of Amortized Revolving Debt. Pass-through securities
backed by credit card receivables.
- Related:net financing
- Carring costs
- Costs that increase with increases in the level of investment in
- Carrying value
- Book value.
- Certificates of Automobile Receivables. Pass-through securities
backed by automobile receivables.
- 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
Cash equivalents on balance
sheets include securities (e.g., notes) that mature within 90
- Cash budget
- A forecasted summary of a firm's expected cash inflows and cash
outflows as well as its expected cash and
- Cash and carry
- Purchase of a security and simultaneous sale of a future, with the
balance being financed with a loan or
- 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 government bonds and
Cash equivalents on balance sheets
include securities (e.g., notes) that mature within 90 days.
- Cash commodity
- The actual physical commodity,
as distinguished from a futures
- Cash conversion cycle
- The length of time between a firm's purchase of
inventory and the receipt of cash
from accounts receivable.
- Cash cow
- A company that pays out all
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
- Cash cycle
- In general, the time between cash disbursement and cash collection.
In net working capital
management, it can be thought of as the operating cycle less the
accounts payable payment period.
- Cash deficiency agreement
- An agreement to invest cash in a project to the
extent required to cover any cash deficiency the project may
- 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's shareholders. The amount is normally based on profitability
and is taxable as income. A cash distribution may include
capital gains and
return of capital in addition to
- Cash equivalent
- A short-term security that is sufficiently liquid that it may be
considered the financial equivalent of cash.
- Cash flow
- In investments, it represents
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
- Cash flow coverage ratio
- The number of times that financial obligations
principal payments, preferred
stock dividends, and rental
payments) are covered by earnings
before interest, taxes, rental payments, and
- Cash flow from operations
- A firm's net cash inflow resulting directly from its regular
operations (disregarding extraordinary items such as the sale of
fixed assets or
associated with issuing securities), calculated as the sum of net
income plus non-cash expenses that were deducted in calculating net
- Cash flow matching
- Also called dedicating a portfolio, this is an alternative to
immunization in which the manager matches the maturity of each
element in the liability stream,
working backward from the last liability to assure all required cash
- Cash flow per common share
- Cash flow from operations minus
preferred stock dividends,
divided by the number of common shares outstanding.
- Cash flow time-line
- Line depicting the operating activities and cash flows for a
firm over a particular period.
- 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 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.
- Cash offer
- A public equity issue that is
sold to all interested investors.
- Cash ratio
- The proportion of a firm's
assets held as cash.
- Cash settlement contracts
- Futures contracts,
such as stock index futures, that settle for cash, not involving the
delivery of the
- Cash transaction
- A transaction where exchange is immediate, as contrasted to a
forward contract, which
calls for future delivery of an asset at an agreed-upon price.
- Cash-equivalent items
- Temporary investments of currently excess cash in short-term,
high-quality investment media such as
treasury bills and
- Cash-surrender value
- An amount the insurance company will pay if the policyholder
ends a whole life
- Refers to a situation where a firm runs out of
cash and cannot readily sell marketable
- Chicago Board Options Exchange. A securities exchange created in
the early 1970s for the public trading of standardized
- A centralized clearing system for
- Certainty equivalent
- An amount that would be accepted in lieu of a chance at a
possible higher, but uncertain, amount.
- Certificate of deposit (CD)
- Also called a time deposit, this is a certificate issued by a
bank or thrift that indicates a specified sum of money has been
deposited. A CD bears a maturity
date and a specified interest
rate, and can be issued in any denomination. The
duration can be up to five years.
- Cash flow after taxes.
- The Commodity Futures Trading Commission is the federal agency
created by Congress to regulate futures
trading. The Commodity Exchange Act of 1974 became effective April 21,
1975. Previously, futures trading had been regulated by the Commodity
Exchange Authority of the USDA.
- Characteristic line
- The market model applied
to a single security. The slope of
the line is a security's beta.
- Changes in Financial Position
- Sources of funds internally provided from operations that alter
a company's cash flow position:
depreciation, deferred taxes, other sources, and
- Related: technical
- 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.
- Chicago Mercantile Exchange (CME)
- A not-for-profit corporation owned by its members. Its primary
functions are to provide a location for trading
options, collect and disseminate
market information, maintain a clearing mechanism and enforce trading
- Chinese wall
- Communication barrier between financiers (investment bankers) and
traders. This barrier is erected to
prevent the sharing of inside information that bankers are likely to
- Excessive trading of a client's \
account in order to increase the broker's commissions.
- Underwriters, actual or
potential, often seek out and "circle" investor interest in a new
issue before final pricing. The customer circled basically made a
commitment to purchase the issue if it comes at an agreed-upon price.
In the latter case, if the price is other than that stipulated, the
customer supposedly has first offer at the actual price.
- Circus swap
- A fixed rate currency swap against
floating U.S. dollar LIBOR payments.
- Claim dilution
- A reduction in the likelihood one or more of the firm's claimants
will be fully repaid, including time value of money considerations.
- A party to an explicit or implicit
- Clean opinion
- An auditor's opinion reflecting an unqualified acceptance of a
company's financial statements.
- Clean price
- Bond price excluding accrued interest.
- A trade is carried out by the
seller delivering securities and the buyer delivering funds in proper
form. A trade that does not clear is said to fail.
- Clear a position
- To eliminate a long or
short position, leaving no ownership
- Clearing House Automated Payments System (CHAPS)
- A computerized clearing system for sterling funds that began operations in 1984. It includes
14 member banks, nearly 450 participating banks, and is one of the
clearing companies within the structure of the Association for
Payment Clearing Services (APACS).
- Clearing House Interbank Payments System (CHIPS)
- An international wire transfer system for high-value payments operated
by a group of major banks.
- Clearing member
- A member firm of a clearing house. Each clearing
member must also be a member of the exchange. Not all members of the
exchange, however, are members of the clearing organization. All
trades of a non-clearing member must be registered with, and
eventually settled through, a clearing member.
- An adjunct to a futures
exchange through which transactions executed its floor are settled
by a process of matching purchases and sales. A clearing organization
is also charged with the proper conduct of
delivery procedures and the
adequate financing of the entire operation.
- Clientele effect
- The grouping of investors who have a preference that the
firm follow a particular financing policy, such as the amount of
leverage it uses.
- Close, the
- The period at the end of the trading session. Sometimes used to
refer to closing price. Related: Opening, the.
- Closed-end fund
- An investment company that sells shares
like any other corporation and usually does not redeem its shares.
A publicly traded fund sold on stock exchanges
or over the counter that may trade
above or below its net asset value.
Related: Open-end fund.
- Closed-end mortgage
- Mortgage against which no
additional debt may be issued.
- Closing purchase
- A transaction in which the purchaser's intention is to reduce
or eliminate a short position
in a stock, or in a given series
- Closing range
- Also known as the range. The high
and low prices, or bids and
offers, recorded during the period
designated as the official close. Related:
- Closing sale
- A transaction in which the seller's intention is to reduce or
eliminate a long position in
a stock, or a given series of
- Cluster analysis
- A statistical technique that identifies clusters of stocks whose
returns are highly
correlated within each cluster and
relatively uncorrelated between clusters. Cluster analysis has
identified groupings such as growth, cyclical, stable and
- Coefficient of determination
- A measure of the goodness of fit of the relationship between the
dependent and independent variables in a regression analysis; for
instance, the percentage of variation in the
return of an
asset explained by the
- Coinsurance effect
- Refers to the fact that the merger
of two firms decreases the probability of
default on either firm's debt.
- An upper and lower limit on the
interest rate on a
floating-rate note (FRN).
- Assets than can be repossessed if a borrower
- Collateral trust bonds
- A bond in which the
issuer (often a holding company)
grants investors a lien on stocks, notes, bonds, or other financial
asset as security.
Compare mortgage bond.
- Collateralized mortgage obligation (CMO)
- A security backed by a pool of
pass-through rates , structured so
that there are several classes of bondholders with varying maturities,
called tranches. The principal payments from the underlying pool of
pass-through securities are used to retire the bonds on a priority
basis as specified in the prospectus.
Related: mortgage pass-through security
- Collection float
- The negative float that is created between the time when you
deposit a check in your account and the time when funds are made
- Collection fractions
- The percentage of a given month's sales collected during the
month of sale and each month following the month of sale.
- Collection policy
- Procedures followed by a firm in attempting to collect
- Collective wisdom
- The combination of all of the individual opinions about a
stock's or security's value.
- A bank that ranks just below a
lead manager in a
syndicated Eurocredit or
international bond issue. Comanagers may assist the lead manger
bank in the pricing and issue of the instrument.
- Combination matching
- Also called horizon matching, a variation of
multiperiod immunization and
cash flow matching
in which a portfolio is created
that is always duration matched
and also cash-matched in the first few years.
- Combination strategy
- A strategy in which a put and
with the same strike price
and expiration are either both bought or both sold. Related:
- Commercial draft
- Demand for payment.
- Commercial paper
- Short-term unsecured promissory notes
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 or less.
- Commercial risk
- The risk that a foreign debtor
will be unable to pay its debts because of business events, such as
- The fee paid to a broker
to execute a trade, based on number
of shares, bonds,
options, and/or their dollar value.
In 1975, deregulation led to the creation of discount brokers, who
charge lower commissions than full service brokers. Full service
brokers offer advice and usually have a full staff of analysts who
follow specific industries. Discount brokers simply execute a
client's order -- and usually do not offer an opinion on a stock.
Also known as a round-turn.
- Commission broker
- A broker on the floor of an exchange acts as agent for a
particular brokerage house and who buys and sells stocks for the
brokerage house on a commission basis.
- Commission house
- A firm which buys and sells future contracts
for customer accounts. Related:
futures commission merchant,
- A trader is said to have a commitment when he assumes the obligation
to accept or make delivery on a
Related: Open interest
- Commitment fee
- A fee paid to a commercial bank in return for its legal
commitment to lend funds that have not yet been advanced.
- Committee, AIMR Performance Presentation Standards Implementation Committee
- The Association for Investment Management
and Research (AIMR's) Performance Presentation Standards Implementation Committee is charged with the
responsibility to interpret, revise and update the AIMR
Performance Presentation Standards (AIMR-PPS(TM) for
- Commodities Exchange Center (CEC)
- The location of five New York futures
exchanges: Commodity Exchange, Inc. (COMEX), the New York Mercantile
exchange (NYMEX), the New York Cotton Exchange, the Coffee, Sugar and
Cocoa exchange (CSC), and the New York futures
exchange (NYFE). common size statement A statement in which all items
are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial
statement items. For example, all items in each year's
income statement could be
presented as a percentage of net sales.
- A commodity is food, metal, or another physical substance that
investors buy or sell, usually via futures
- Common market
- An agreement between two or more countries that permits the free
movement of capital and labor as well as goods
- Common shares
- In general, there are two types of shares, common and preferred stock. The common shares usually entitle the shareholders to vote at shareholders meetings. The common shares have a discretionary dividend.
- Common stock
- These are securities that represent
equity 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 in a
company's profits via dividend
payments or the capital appreciation of the
- Common stock/other equity
- Value of outstanding common
shares at par, plus accumulated retained
earnings. Also called
- Common stock equivalent
- A convertible security
that is traded like an equity
issue because the optioned common
stock is trading high.
- Common stock market
- The market for trading equities, not including
- Common stock ratios
- Ratios that are designed to measure the relative claims of
earnings (cash flow
per share), and equity (book value
per share) of a firm.
- Common-base-year analysis
- The representing of accounting information over multiple years as
percentages of amounts in an initial year.
- Common-size analysis
- The representing of balance sheet
items as percentages of assets and of
income statement items as
percentages of sales.
- Company-specific risk
- Related: Unsystematic risk
- Comparative credit analysis
- A method of analysis in which a firm is compared to others that
have a desired target debt rating in
order to infer an appropriate financial ratio target.
- Comparison universe
- The collection of money managers of similar investment style
used for assessing relative performance of a portfolio manager.
- Compensating balance
- An excess balance that is left in a bank to provide indirect
compensation for loans extended or
- Sufficient ability or fitness for ones needs. Possessing the
necessary abilities to be qualified to achieve a certain goal or
complete a project.
- Intra- or intermarket rivalry between businesses trying to
obtain a larger piece of the same market share.
- Competitive bidding
- A securities offering process
in which securities firms submit competing
bids to the issuer for the securities
the issuer wishes to sell.
- Competitive offering
- An offering of securities through competitive
- Complete capital market
- A market in which there is a
distinct marketable security for
each and every possible outcome.
- Complete portfolio
- The entire portfolio,
including risky and risk-free assets.
- Completion bonding
- Insurance that a construction contract will be successfully
- Completion risk
- The risk that a project will not
be brought into operation successfully.
- Completion undertaking
- An undertaking either (1) to complete a project such that it meets
certain specified performance criteria on or before a certain
specified date or (2) to repay project debt if the completion test
cannot be met.
- Voluntary arrangement to restructure a firm's
debt, under which payment is reduced.
- Compound interest
- Interest paid on previously
earned interest as well as on the principal.
- Compound option
- Option on an option.
- The process of accumulating the
time value of money
forward in time. For example, interest
earned in one period earns additional interest during each subsequent
- Compounding frequency
- The number of compounding periods in a year. For example,
quarterly compounding has a compounding frequency of 4.
- Compounding period
- The length of the time period (for example, a quarter in the case
of quarterly compounding) that elapses before
- Comprehensive due diligence investigation
- The investigation of a firm's business in conjunction with a securities offering to
determine whether the firm's business and financial situation and its
prospects are adequately disclosed in the prospectus for the offering.
- Concentration account
- A single centralized account into which funds collected at
regional locations (lockboxes) are transferred.
- Concentration services
- Movement of cash from different lockbox
locations into a single concentration account from which
disbursements and investments are made.
- Concession agreement
- An understanding between a company and the host government that
specifies the rules under which the company can operate locally.
- Conditional sales contracts
- Similar to equipment trust certificates except that the lender is
either the equipment manufacturer or a bank or finance company to
whom the manufacturer has sold the conditional sales
- Confidence indicator
- A measure of investors' faith in the economy and the securities
market. A low or deteriorating level of confidence is considered by
many technical analysts
as a bearish sign.
- Confidence level
- The degree of assurance that a specified failure
rate is not exceeded.
- The written statement that follows any "trade" in the
securities markets. Confirmation is issued immediately after a
trade is executed. It spells out
settlement date, terms,
between bondholders and stockholders
- These two groups may have interests in a corporation that conflict.
Sources of conflict include dividends,
distortion of investment, and underinvestment.
Protective covenants work to resolve
- A firm engaged in two or more unrelated businesses.
- Conglomerate merger
- A merger involving two or more
firms that are in unrelated businesses.
- Consensus forecast
- The mean of all financial
analysts' forecasts for a company.
- A government bond with no maturity . Popular in Great Britain. The formula for valuing these bonds is simple. The consol payment divided by yield to maturity is the price of the bond.
- The combining of two or more firms to form an entirely new entity.
- Consortium banks
- A merchant banking
subsidiary set up by several banks that may or may not be of the same
nationality. Consortium banks are common in the Euromarket and are
active in loan syndication.
- Constant-growth model
- Also called the Gordon-Shapiro model, an application of the
dividend discount model
which assumes (1) a fixed growth
rate for future dividends and (2) a single
- Consumer credit
- Credit granted by a firm to consumers for
the purchase of goods or services. Also called retail credit.
- Consumer Price Index
- The CPI, as it is called, measures the 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 very month.
- A market condition in which futures prices
are higher in the distant delivery months.
- Contingent claim
- A claim that can be made only if one or more specified outcomes
- Contingent deferred sales charge (CDSC)
- The formal name for the load of a back-end
- Contingent immunization
- An arrangement in which the money manager
pursues an active bond
portfolio strategy until an
adverse investment experience drives the then-available potential
return down to the safety-net level.
When that point is reached, the
money manager is obligated
to pursue an immunization
strategy to lock in the safety-net level return.
- Contingent pension liability
- Under ERISA, the firm is liable to the plan participants for up
to 39% of the net worth of the
- Continuous compounding
- The process of accumulating the
time value of money
forward in time on a continuous, or instantaneous, basis. Interest is
earned continuously, and at each instant, the interest that accrues
immediately begins earning interest on itself.
- Continuous random variable
- A random value that can take any fractional value within specified
ranges, as contrasted with a discrete variable.
- A term of reference describing a unit of
trading for a financial or
commodity future. Also, the
actual bilateral agreement between the buyer and seller of a
transaction as defined by an exchange.
- Contract month
- The month in which futures
contracts may be satisfied by making or accepting a
delivery. Also called value
managers, those who assemble portfolios with relatively lower betas,
lower price-book and P/E ratios and
higher dividend yields, seeing
value where others do not.
- Contribution margin
- The difference between variable revenue and variable cost.
- 50% of the outstanding votes plus one vote.
- Controlled disbursement
- A service that provides for a single presentation of checks each
day (typically in the early part of the day).
- Controlled foreign corporation (CFC)
- 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.
- The corporate manager responsible for the firm's accounting
- Convenience yield
- The extra advantage that firms derive from holding the
commodity rather than the
- Convention statement
- An annual statement filed by a life insurance company in each
state where it does business in compliance with that state's
regulations. The statement and supporting documents show, among
other things, the assets,
liabilities, and surplus of the
- Conventional mortgage
- A loan based on the credit of the borrower and on the collateral
for the mortgage.
- Conventional pass-throughs
- Also called private-label pass-throughs, any
mortgage pass-through security
not guaranteed by government agencies. Compare
- Conventional project
- A project with a negative initial cash flow
(cash outflow), which is expected to be followed by one or more
future positive cash flows (cash inflows).
- The movement of the price of a futures contract
toward the price of the underlying cash commodity.
At the start, the contract
price is higher because of the time value.
But as the contract nears expiration, the futures
price and the cash price converge.
- Conversion factors
- Rules set by the Chicago Board of Trade for determining the
invoice price of each
acceptable deliverable Treasury issue
against the Treasury Bond
- Conversion parity price
- Related:Market conversion price
- Conversion premium
- The percentage by which the conversion price in a
convertible security exceeds
the prevailing common stock price at
the time the convertible security is issued.
- The degree of freedom to exchange a
currency without government restrictions or
- Convertible price
- The contractually specified price per share at which a
can be converted into shares of common stock.
- Conversion ratio
- The number of shares
of common stock that the security
holder will receive from exercising the
call option of a
- Conversion value
- Also called parity value, the value of a
if it is converted immediately.
- Convertible bonds
- Bonds that can be converted into common stock at the
option of the holder.
- Convertible eurobond
- A eurobond that can be
converted into another asset, often through
exercise of attached warrants.
- Convertible exchangeable preferred stock
- Convertible preferred stock
that may be exchanged, at the issuer's option, into convertible bonds
that have the same conversion features as the convertible preferred
- Convertible preferred stock
- Preferred stock that
can be converted into common stock at the option
of the holder.
- Convertible security
- A security that can be
converted into common stock at the option
of the security holder, including
and convertible preferred stock.
- Bowed, as in the shape of a curve. Usually referring to the
price/required yield relationship for
- Core competency
- Primary area of competence. Narrowly defined fields or tasks at
which a company or business excels. Primary areas of specialty.
- Corner A Market
- To purchase enough of the available supply of a commodity or stock in order to manipulate its price.
- Corporate acquisition
- The acquisition of one firm by anther firm.
- Corporate bonds
- Debt obligations issued by
- Corporate charter
- A legal document creating a corporation.
- Corporate finance
- One of the three areas of the discipline of
finance. It deals with the
operation of the firm (both the investment decision and the
financing decision) from that firm's point of view.
- Corporate financial management
- The application of financial principals within a corporation to create
and maintain value through decision making and proper resource
- Corporate financial planning
- Financial planning
conducted by a firm that encompasses preparation of both long- and
short-term financial plans.
- Corporate processing float
- The time that elapses between receipt of payment from a customer
and the depositing of the customer's check in the firm's bank account;
the time required to process customer payments.
- Corporate tax view
- The argument that double (corporate and individual) taxation of
equity returns makes
debt a cheaper financing method.
- Corporate taxable equivalent
- Rate of return required
on a par bond to produce the same after-tax
yield to maturity
that the premium or
discount bond quoted would.
- A legal "person" that is separate and distinct from its owners.
A corporation is allowed to own assets,
incur liabilities, and sell
securities, among other things.
- See: Correlation coefficient.
- Correlation coefficient
- A standardized statistical measure of the dependence of two
defined as the covariance divided by the
standard deviations of
- Cost company arrangement
- Arrangement whereby the shareholders of a project receive output
free of charge but agree to pay all operating and financing charges of
- Cost of capital
- The required return for a capital budgeting project.
- Cost of carry
Net financing cost
- Cost of equity
- The required rate of return for an investment of 100% equity.
- Cost of funds
- Interest rate
associated with borrowing money.
- Cost of lease financing
- A lease's
internal rate of return.
- Cost of limited partner capital
- The discount rate that equates
the after-tax inflows with outflows for capital
raised from limited partners.
- Cost-benefit ratio
- The net present value
of an investment divided by the investment's initial cost. Also
called the profitability index.
- Counter trade
- The exchange of goods for other goods rather than for cash; barter.
- Counterpart items
- In the balance of payments,
counterpart items are analogous to unrequited transfers in the
current account. They arise because
the double-entry system in balance of payments accounting and refer
to adjustments in reserves owing to monetization or demonetization
of gold, allocation or cancellation of SDRs, and revaluation of the
various components of total reserves.
- The parties to an interest rate swap.
- Party on the other side of a trade or transaction.
- Counterparty risk
- The risk that the other party to an 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 agreed.
- Country economic risk
- Developments in a national economy that can affect the outcome
of an international financial transaction.
- Country beta
- Covariance of a national economy's rate
of return and the rate of return the
world economy divided by the variance of the world economy.
- Country financial risk
- The ability of the national economy to generate enough
foreign exchange to meet
payments of interest and
principal on its foreign