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Glossary : C

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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.
Calendar spread: Applies to derivative products. Bull spread in which there is a simultaneous purchase and sale of options of the same class at different strike prices, but with the same expiration date.
Call: An option that gives the right to buy the underlying futures contract.
Callable: Mainly applies 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 floating new bonds at lower rates.
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.
Called away: Convertibles: redeemed before maturity.
Option: Call or put option exercised against the stockholder.
Sale: Delivery required on a short sale.
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 investor 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 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 callable bonds that establishes an initial period when the bonds may not be called.
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 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.

Cancel: Used in the context of general equities. Void an order to buy or sell from 1) the floor, or 2) the trader/salesman's scope. In Autex, the indication still remains on record as having once been placed unless it is expunged.
Canadian agencies: agency banks established by Canadian Banks in the U.S.
Canadian Dealing Network (C.D.N.): The organized O.T.C. market of Canada. Formerly known as the Canadian Over-the counter Automated Trading System (COATS), the C.D.N. became a subsidiary of the Toronto Stock Exchange in 1991.
Canadian Exchange Group (C.E.G.): The C.E.G. is an association between the Toronto Stock Exchange, the Montreal Exchange, the Vancouver Stock Exchange, the Alberta Stock Exchange and the Winnipeg Stock Exchange for the purpose of providing Canadian market data to customers outside Canada.
"Can get $xxx": Refers to over-the-counter trading. "I have a buyer who will pay $xxx for the stock "; usually a standard markdown (1/8) from $xxx is applied to this price in bidding the seller for his stock. Antithesis of cost me.
"Cannot compete": Used in the context of general equities. Cannot accommodate customers (i.e., compete with other market-makers) at that price level, often due to not having a natural opposite side of the trade.
"Cannot complete": Used in the context of general equities. Inability to finish an order on a principal or agency basis given prevailing price instructions and/or market conditions.
Cap: An upper limit on the interest rate on a floating-rate note (F.R.N.) or an adjustable rate mortgage (A.R.M.).

Capital: Money invested in a firm.
Capital account: Net result of public and private international investment and lending activities.
Capital allocation decision: Allocation of invested funds between risk-free assets and the risky portfolio.
Capital asset pricing model (C.A.P.M.): An economic theory that describes the relationship between risk; and expected return, and serves as a model for the pricing of risky securities. The C.A.P.M. asserts that the only risk that is priced by rational investors is systematic risk, because that risk cannot be eliminated by diversification. The C.A.P.M. 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.
Capital budget: A firm's set of planned capital expenditures.
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 (C.M.L.): The line defined by every combination of the risk-free asset and the market portfolio. The line represents the extra risk premium you get for taking an extra risk. Defined by the Capital Asset Pricing Model.
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 budget.
Capital stock: Stock authorized by a firm's charter and having par value, stated value, or no par value. The number and 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
long maturities.

Capital surplus: Amounts of directly contributed equity capital in excess of the par value.
Capitalization: The debt and/or equity mix that funds a firm's assets.
Capitalization method: A method of constructing a replicating portfolio in which the manager purchases a number of the largest-capitalized names in the stock index in proportion to their capitalization.
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 capitalization ratios.
Capitalized: 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.
Car: A loose quantity term sometimes used to describe 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 (C.A.R.D.s): Pass-through securities backed by credit card receivables.
Carry: Related:net financing cost.
Carrying costs: Costs that increase with increases in the level of investment in current assets.
Carrying value: Book value.
Certificates of Automobile Receivables (C.A.R.s): Pass-through securities backed by automobile receivables.
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 (e.g., notes) that mature within 90 days.
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 & carry: Applies to derivative products. Combination of a long position in a stock/index/commodity and short position in the underlying future, whereby a cost of carry exists on the long position.
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 Banker's Acceptances. 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 contract.
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 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 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 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'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 the dividend.
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 earnings before depreciation, amortizationand 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 coverage ratio: The number of times that financial obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation.
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 transaction costs associated with issuing securities), calculated as the sum of net income plus non-cash expenses that were deducted in calculating net income.
Cash flow matching: Also called dedicating a portfolio, this is an alternative to multiperiod 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 flows.
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. 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 plus convertible: Mainly applies to convertible securities. Convertible bond which requires cash payment upon conversion.
Cash price: Applies to derivative products. See: Spot price.
Cash ratio: The proportion of a firm's assets held as cash.
Cash sale/settlement: Used in the context of general equities. Transaction in which the contract is settled on the same day as the trade date, or next day if the trade is after 2:30 p.m. E.S.T. And the parties agree to this procedure. Often settled in this way because a party is strapped for cash and cannot wait until the regular, five business day, settlement. See: Settlement date.
Cash settlement contracts: Futures contracts, such as stock index futures, that settle for cash, not involving the delivery of the underlying.
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 securities such as treasury bills and Banker's Acceptances.
Cash-surrender value: The amount an insurance company will pay if the policyholder ends a whole life insurance policy.
Cashout: Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.
CEDEL: A centralized clearing system for Eurobonds.
Certainty equivalent: An amount that would be accepted in lieu of a chance to receive a possibly higher, but uncertain, amount.
Certificate of deposit (C.D.): 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 C.D. bears a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.
C.F.A.T.: Cash flow after taxes.
Characteristic line: The market model applied to a single security. i.e. a regression of security returns or the benchmark return. 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 capital expenditures.
Chartists: Related: technical analysts.

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 Board Options Exchange (C.B.O.E.): A securities exchange created in the early 1970s for the public trading of standardized option contracts. Locale where the trading of stock options, foreign currency options, and index options (S&P 100, 500, and 0.T.C. 250 index) is predominant.
Chicago Mercantile Exchange (C.M.E.): A not-for-profit corporation owned by its members. Its primary functions are to provide a location for trading futures and options, collect and disseminate market information, maintain a clearing mechanism and enforce trading rules. Applies to derivative products. A locale where the trading of futures (O.T.C. 250 industrial stock price index, S& P 100 and 500 index) and futures options (S&P 500 stock index) is predominant.
Chinese hedge: Mainly applies to convertible securities. Trading hedge in which one is short the convertible and long the underlying common, hoping that the convertible's premium will contract. Antithesis of set up.
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 have.
Choice market: Mainly applies to international equities. Locked market in London terminology.
Churning: Excessive trading of a client's account in order to increase the broker's commissions.
Circle: 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. If the actual 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 L.I.B.O.R. 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.
Claimant: A party to an explicit or implicit contract.
Class: Applies to derivative products. Options of the same type - put or call - with the same underlying security. See: series.
Clean: Used in the context of general equities. Block trade that matches buy or sell orders/interests, sparing the block trader any inventory risk (no net position and hence none available for additional customers). Natural. Antithesis of open.

Clean opinion: An auditor's opinion reflecting an unqualified acceptance of a company's financial statements.
Clean price: Bond price excluding accrued interest.
Clean up: Used in the context of general equities. Purchase/sale of all the remaining supply/demand of/for stock, or the last piece of a block, in a trade -- leaving a net zero position.
"Clean your skirts": Used in the context of general equities. "Make all of your obligated calls "; checking with all prior obligations in a security. Often preceded by "subject to".
Clear: A trade is settled out by the seller delivering securities and the buyer delivering funds in proper form. A trade that does not clear is said to fail. Comparison of the details of a transaction between broker/dealers prior to settlement; final exchange of securities for cash on delivery.
Clear a position: To eliminate a long or short position, leaving no ownership or obligation.
Clearinghouse: An adjunct to a futures exchange through which transactions executed on 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.
Clearing House Automated Payments System (C.H.A.P.S.): 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 (A.P.A.C.S.).
Clearing House Electronic Subregister System (C.H.E.S.S.): C.H.E.S.S. is the automatic transfer and settlement system for the majority of Australian Stock Exchange (A.S.X.) listed securities.
Clearing House Interbank Payments System (C.H.I.P.S.): 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.
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 a position: Used in the context of general equities. Eliminate an investment from one's portfolio, by either selling a long position or covering a short position.
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.
Closely held company: A company who has a small group of controling shareholders. In contrast, a widely-held firm has many shareholders. It is difficult or impossible to wage a proxy battle for any closely-held firm.
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 of options.
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: settlement price.
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 options.
Closing transaction: Applies to derivative products. Buy or sell transaction that eliminates an existing position (selling a long option or buying back a short option).
Antithesis of opening transaction.
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 energy stocks.
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 market portfolio return. Also known as R-squared.
Coffee, Sugar & Cocoa Exchange (CS&CE): The New York-based commodity exchange trading futures and options on softs. The CS&CE shares the trading floor at the Commodities Exchange Center.

Coinsurance effect: Refers to the fact that the merger of two firms decreases the probability of default on either firm's debt.
Collar: An upper and lower limit on the interest rate on a floating-rate note (F.R.N.) or an adjustable rate mortgage (A.R.M.).
Collateral: Asset than can be repossessed if a borrower defaults.
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 (C.M.O.): 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 available.
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 accounts receivables.
Collective wisdom: The combination of all of the individual opinions about a stock's or security's value.
Colt (Continuous on-line trading system): Computerized O.T.C. traders-assistance system that provides for trade entry and position monitoring, among other functions.
Comanger: 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: Applies to derivative products. Arrangement of options involving two long or two short positions with different expiration dates or strike (exercise) prices. See: straddle.
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 call with the same strike price and expiration are either both bought or both sold. Related: straddle
Come in: Used in the context of general equities. Fall in price.
Comeout, the: Used in the context of general equities. The opening. Antithesis of the Close.

Come out of the trade: Used in the context of general equities. Trader's resulting position in a security from executing a trade (or the expectations thereof). Antithesis of going into the trade.
COMEX: A division of the New York Mercantile Exchange (N.Y.M.E.X.). Formerly known as the Commodity Exchange, COMEX is the leading U.S. market for metals futures and options trading.
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 bankruptcy.
Commission: 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 who acts as agent for a particular brokerage house and buys and sells stocks for the brokerage house on a commission basis.
Commission house: A firm which buys and sells futures contracts for customer accounts. Related: futures commission merchant, omnibus account.
Commitment: A trader is said to have a commitment when he assumes the obligation to accept or make delivery on a futures contract. 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. Often used in risk arbitrage. Payment to institutional investors in the U.K. (pension funds and life insurance companies) by the lead underwriter of a takeover that takes place when the underwriter provides the target company's shareholders with a cash alternative for a target company's shares in exchange for the bidding companies' shares. The payment is typically 0.5% for the first 30 days, 1.25% for each week thereafter and a final 0.75% acceptance payment when the takeover is completed.
Committee on Uniform Securities Identification Procedures (C.U.S.I.P.): Committee that assigns identifying numbers and codes for all securities. These "C.U.S.I.P." numbers and symbols are used when recording all buy or sell orders.
Commodities Exchange Center (C.E.C.): 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).
Commodity: A commodity is food, metal, or another physical substance that investors buy or sell, usually via futures contracts.
Commodity Futures Trading Commission (C.F.T.C.): Applies to derivative products. Commodity futures trading commission is an agency created by Congress in 1974 to regulate exchange trading in futures.
Common-base-year analysis: The representing of accounting information over multiple years as percentages of amounts in an initial year.
Common code: A nine digit identification code issued jointly by CEDEL and Euroclear. As of January 1991 common codes replaced the earlier separate CEDEL and Euroclear codes.
Common market: An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services.
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 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.
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 security. Used in the context of general equities.) units of ownership of a public corporation with junior status to the claims of secured/unsecured creditors, bond and preferred shareholders in the event of liquidation.
Common stock/other equity: Value of outstanding common shares at par, plus accumulated retained earnings. Also called shareholders' equity.
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 preferred stock.
Common stock ratios: Ratios that are designed to measure the relative claims of stockholders to earnings (cash flow per share), and equity (book value per share) of a firm.

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
Company, the: Used for listed equity securities and refers to over-the-counter trading. Public-traded corporation involved in the corporate repurchase of its shares.
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 services provided.
Competence: Sufficient ability or fitness for ones needs. Possessing the necessary abilities to be qualified to achieve a certain goal or complete a project.
Competition: Intra- or intermarket rivalry between businesses trying to obtain a larger piece of the same market share.
Competition ahead: Often used in risk arbitrage. Situation whereby another O.T.C. market-maker has transacted with Investment bank at the stated market level (without being faded) before the present bid/offer has been made. For example, if bear steams hits a Investment bank bid and we subsequently go down an eighth, followed by an offering being received by Investment bank at this previously transacted price, "Competition was ahead"of Investment banks.
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 bidding.
Complete: Used in the context of general equities. Fill.
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 completed.
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.
Composition: 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.
Compounding: 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 time period.
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 interest compounds.
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 call: Mainly applies to convertible securities. Circumstances under which a company can effect an earlier call, usually stated as percentage of a stock's trading price during a particular period, such as 140% of the exercise price during a 40-day trading span.
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 contract.
Condor: Applies to derivative products. Option strategy consisting of both puts and calls at different strike prices that capitalizes on a narrow range of volatility. The payoff diagram takes the shape of a bird.
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 letter: Often used in risk arbitrage. Statement by an investment bank that it is highly confident that the financing for its client/acquirer's takeover can and will be obtained.
Confidence level: The degree of assurance that a specified failure rate is not exceeded.
Confirmation: 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, commission, etc.
"Confirm me out": Used for listed equity securities. "Go to the floor and check with the specialist or floor broker that my previously active order has been cancelled and was not executed". One does not have to honor any trade reported after given a "firm out".
Conflict 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 these conflicts.
Conglomerate: 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.
Consol: 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.
Consolidated tape: Used for listed equity securities. Combined ticker tapes of the N.Y.S.E. and the curb. Network A covers the N.Y.S.E.-listed securities and is used to identify the originating market. Network B does the same for AMEX-listed securities and also reports on securities listed on regional stock exchanges. See tape.
Consolidation: The combining of two or more firms to form an entirely new entity.
Consortium banks