CAC 40 index
A broad-based index of common stocks composed of 40 of the 100 largest companies listed on the forward segment of the official list of the Paris Bourse.

Cage
A section of a brokerage firm used for receiving and disbursing funds.

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 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 bond issuer 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 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 an option
To exercise a call option.

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 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 option exercised against the stockholder.
Sale: Delivery required on a short sale.

Cumulative Auction Market Preferred Stocks (CAMPS)
Stands for Cumulative Auction Market Preferred Stocks, Oppenheimer & Company's Dutch Auction preferred stock product.

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.

"Can get $xxx"
Refers to over-the-counter trading. "I have a buyer who will pay $xxx for the stock". Usually a standard markdown from $xxx is applied to this price in bidding the seller for its stock. Antithesis of cost me.

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.

"Cannot compete"
In the context of general equities, cannot accommodate customers at that price level (i.e., compete with other market makers), often because there is no natural opposite side of the trade.

"Cannot complete"
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 (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
Credit grantors' 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.

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 appreciation
See: Capital growth

Capital appreciation fund
See: Aggressive growth fund

Capital asset
A long-term asset, 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 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 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's long-term assets.

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 insured money market deposit account without losing access to the money.

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 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 net cost, 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-term capital 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's market 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-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.

Capital International Indexes
Market indexes maintained by Morgan Stanley that track major stock markets worldwide.

Capital investment
See: Capital expenditure.

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 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
The market for trading long-term debt instruments (those that mature in more than one year). Also 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 issuing debt is generally valuable, but that the firm's optimal choice of capital structure involves various other views of capital structure ( net corporate/personal tax, agency cost, 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 investment company, 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's charter 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 long maturities.

Capital surplus
Amounts of directly contributed equity capital in excess of the par value.

Capital turnover
Calculated by dividing annual sales by average stockholder equity (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.

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 most highly capitalized names in the stock index 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-term debt 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.

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.

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 commodity underlying one commodity contract; 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.

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.

Carrot equity
British slang for an equity investment 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 carrying securities 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.

Cartel
A group of businesses or nations that act together as a single producer to obtain market control 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 account
A brokerage account that settles transactions on a cash-rather than credit-basis.

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 asset ratio
Cash and marketable securities divided by current liabilities. See: Liquidity ratios.

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 basis
Refers to the accounting method that recognizes revenues and expenses when cash is actually received or paid out.

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 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 futures, which entails a cost of carry on the long position. Also known as cash and carry arbitrage.

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 earnings
A firm's cash revenues less cash expenses, which excludes the costs of depreciation.

Cash-equivalent items
Examples include Treasury bills and Banker's Acceptances.

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 per common share
Cash flow from operations minus preferred stock dividends, divided by the number of common shares outstanding.

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 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 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 noncash expenses that are deducted in calculating net income.

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-term debt instruments—such as commercial paper, banker's acceptances, and Treasury bills—that mature in less than one year. Also known as money market instruments 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-cash return
A method used to find the return on investments when there is no active secondary market. The yield is determined by dividing the annual cash income by the total investment. See: Current yield or yield to maturity.

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-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 plus convertible
Convertible bond that requires cash payment upon conversion.

Cash position
The percentage of a mutual fund's assets invested in short-term reserves, such as US Treasury bills or other money market instruments.

Cash price
Applies to derivative products. See: Spot price.

Cash ratio
The proportion of a firm's assets 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 day settlement. 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 index futures that settle for cash and do not involve delivery of the underlying.

Cash-surrender value
The amount an insurance company will pay if the policyholder tenders or cashes in a whole life insurance policy.

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.

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.

Cashout
Occurs when a firm runs out of cash and cannot readily sell marketable securities.

Casualty-insurance
Insurance protecting a firm or homeowner against loss of property, damage, and other liabilities.

Casualty loss
A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event.

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 and dogs
Speculative stocks with short histories of sales, earnings, and dividend payments.

Caveat emptor, caveat subscriptor
Latin expressions for "buyer beware" and "seller beware," which warn of overly risky, inadequately protected markets.

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.

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
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 MNC units from one location, usually at the parent's headquarters.

Cents per share
The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned.

Checkwriting
Free checkwriting privileges offered with nonretirement accounts for select mutual funds.

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% active return 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 Treasury issue that is sold at a deep discount from the face value and pays no coupon interest during its lifetime, but returns the full face value at maturity.

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 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 Origin
A document certifying the country of origin for goods sold internationally.

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.

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.

Certified check
A bank guaranteed check 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.

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.

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.

Chapter 7 Proceedings
Provisions of the Bankruptcy Reform Act under which the debtor firm's assets are liquidated by a court because reorganization would fail to establish a profitable business.

Chapter 11 Proceedings
Provisions of the Bankruptcy Reform Act under which the debtor firm is reorganized by a court because the estimated value of the reorganized firm exceeds the expected proceeds from its liquidation.

Changes in financial position
Sources and uses of funds provided from operations that alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.

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 asset betas is the benchmark. It is the minimum risk beta = 1 portfolio.

Charge
The document evidencing mortgage security 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
Bonds redeemable at par value in the case of a takeover.

Chatter
See: Whipsawed

Chattel Mortgage
A loan agreement that grants to the lender a lien on property other than real estate. Chattel is personal or movable property.

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.

Chicago Board Options Exchange (CBOE)
A securities exchange created in the early 1970s for the public trading of standardized option contracts. Primary place for the trading of stock options, foreign currency options, and index options (S&P 100, 500, and OTC 250 index)

Chicago Board of Trade (CBOT)
The second largest futures exchange in the US, and a pioneer in the development of financial futures and options.

Chicago Mercantile Exchange (CME)
Chicago Mercantile Exchange (CME) is the largest futures exchange in the United States and the second largest exchange in the world for the trading of futures and options on futures. Founded in 1898 as a not-for-profit corporation, in November 2000 CME became the first U.S. financial exchange to demutualize and become a shareholder-owned corporation. Its futures and options on futures trade on CME's trading floors, on its GLOBEX electronic trading platform and through privately negotiated transactions. CME has four major product areas based on interest rates (including Eurodollar futures, the world's most actively traded futures contract), stock indexes (such as the (S&P 500 and Nasdaq-100 futures), foreign exchange and commodities.

Chicago Stock Exchange (CHX)
A major exchange trading only stocks, with 90% of trades taking place on an automated execution system, called MAX.

Chief Executive Officer (CEO)
A title held often by the Chairperson of the Board, or the president. The person principally responsible for the activities of a company.

Chief Financial Officer (CFO)
The officer of a firm responsible for handling the financial affairs of a company.

Chief Operating Officer (COO)
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president.

Chinese hedge
Applies mainly to convertible securities. Trading hedge in which one is short the convertible and long the underlying common, in the hope that the convertible's premium will fall. Antithesis of set-up.

Chinese wall
Communication barrier between financiers at a firm (investment bankers) and traders. This barrier is erected to prevent the sharing of inside information that bankers are likely to have.

Choice market
Applies mainly to international equities. Locked market in London terminology.

Churning
Excessive trading of a client's account in order to increase the broker's commissions.

Cincinnati Stock Exchange (CSE)
Stock exchange based in Cincinnati that is the only fully automated stock exchange in the US. It has no trading floor, but handles all members' transactions using computers.

Circle
Underwriters, actual or potential, often seek out and "circle" investor interest in a new issue before final pricing. The customer circled has basically made a commitment to purchase the issue if it is available at an agreed-upon price. If the actual price is other than that stipulated, the customer supposedly has first offer at the actual price.

Circuit breakers
Measures instituted by exchanges to stop trading temporarily when the market has fallen by a certain percentage in a specified period. They are intended to prevent a market free fall by permitting buy and sell orders to rebalance.

Circus swap
A fixed-rate currency swap against floating US dollar LIBOR payments. An acronym that stands for Combined Interest Rate and CUrrency Swap.

Citizen bonds
Certificateless municipals that can be registered on stock exchanges and are listed in newspapers.

City code on takeovers and mergers
See: Dawn raid

Claim dilution
A decrease in the likelihood that one or more of a firm's claimants will be fully repaid, including time value of money considerations.

Claimant
A party to an explicit or implicit contract.

Class
In the case of derivative products, options of the same type-put or call-with the same underlying security. See: Series. In general, refers to a category of assets such as: domestic equity, fixed income, etc.

Class A/Class B shares
See: Classified stock

Class action
A legal complaint filed by a lawyer or group of lawyers for a group of petitioners with an identical grievance, often with an award proportionate to the number of shareholders involved.

Class of Options
Option contracts of the smae type (call or put) and Style (American, European or Capped) that cover the same underlying security.

Classified Board
Also known as Staggered Board: is one in which the directors are placed into different classes and serve overlapping terms. Since only part of the board can be replaced each year, an outsider who gains control of a corporation may have to wait a few years before being able to gain control of the board. This slow replacement makes a classified board an effective delays of takeovers. Sometimes known as a delay provision.

Classified stock
The division of stock into more than one class of common stock, usually called Class A and Class B. The specific features of each class, which are set out in the charter and bylaws, usually give certain advantages to the Class A shares, such as increased voting power.

Claused Bill of Lading
A bill of lading with a notation that indicates damage or shortage. Also called foul bill of lading and are the opposite of clean bills of lading.

Clawback
The ability to recover prior project cash flow that may have been distributed or paid away as dividends to sponsors.

Clawback
A dividend clawback is an arrangement whereby the equity owners commit to use dividends they have received in the past to finance the cash needs of the project or corporation in the future. Clawback has a more general definition. For example, premiums paid on an insurance policy may be refunded (or clawed back) if the policy is cancelled in a certain time frame. Such an arrangement is specified in the contract and referred to as a clawback provision.

Clean
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 Bill of Lading
A bill of lading bearing no findings of damage or shortage.

Clean opinion
An auditor's opinion reflecting an unqualified acceptance of a company's financial statements.

Clean price
Bond price excluding accrued interest.

Clean Report of Findings
A report issued by an inspection firm, indicating that price has been verified, that the goods have been inspected prior to shipment, and that both conform to buyer specifications.

Clean up
In the context of general equities, purchase/sale of all the remaining supply of stock, or the last piece of a block, in a trade-leaving a net zero position.

"Clean your skirts"
In the context of general equities, i.e. "make all your obligated calls" check with all prior obligations in a security. Often preceded by "subject to."

Clear
To settle a trade by the seller delivering securities and the buyer delivering funds in the 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.

Clear title
Title to ownership that is untainted by any claims on the property or disputed interests, and therefore available for sale. This is usually checked through a title search by a title company.

Clearing corporations
Organizations that are affiliated with exchanges and are used to complete securities transactions by taking care of validation, delivery, and settlement.

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 Electronic Subregister System (CHESS)
CHESS is the automatic transfer and settlement system for the majority of Australian Stock Exchange (ASX) listed securities.

Clearing house funds
Funds from the Federal Reserve System, requiring three days to clear, that are passed to and from banks.

Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value payments operated by a group of major banks.

Clearinghouse
An adjunct to a futures exchange through which transactions executed on its floor where trades 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 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.

Clearing Member Trade Agreement (CMTA)
An agreement that allows a client to execute derivative trades through different brokers yet consolidate positions for clearing purposes at one brokerage firm.

Clientele effect
Describes the tendency of funds or investments to be followed by groups of investors who have similar preferences for a firm which follows a particular financing policy, such as the amount of leverage it uses.

Clone fund
A new fund set up in a fund family to emulate another successful fund.

Close
The close is the period at the end of the trading session. Sometimes used to refer to closing price. Related: Opening.

Close a position
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-end credit
An agreement in which advanced credit plus any finance charges are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed-end agreements.

Close market
An market in which there is a narrow spread between bid and offer prices, due to a high volume of trading and many competing market makers.

Closed corporation
A corporation whose shares are owned by just a few people, having no public market.

Closed-end management company
An investment company that issues a fixed number of shares of the mutual fund that it manages, and does not create new shares if demand increases. Antithesis of an open-end management company.

Closed-end fund
An investment company that issues 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 management company
An investment company that has only a set number of shares of the mutual fund that it manages, and does not create new shares if demand increases. Antithesis of an open-end management company.

Closed-end mortgage
Mortgage against which no additional debt may be issued.

Closed fund
A mutual fund that is no longer issuing shares, mainly because it has grown too large.

Closed out
Position that is liquidated when the client does not meet a margin call or cover a short sale.

Closely held
A corporation whose voting stock is owned by only a few shareholders.

Closely held company
A company who has a small group of controlling 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 costs
All the expenses involved in transferring ownership of real estate.

Closing price
Price of the last transaction of a particular stock completed during a day's trading session on an exchange.

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 quote
The last bid and offer prices of a particular stock at the close of a day's trading session on an exchange.

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 tick
The net of the number of stocks whose closing prices are higher than their previous trades (uptick) against the number of stocks whose closing prices were lower than their previous trades (downtick). A positive closing tick indicates "buying at the close", or a bullish market; a negative closing tick indicates "selling at the close," or a bearish market. See: TRIN.

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.

Closing TRIN
See: TRIN

Cloud on title
Any claim or encumbrance, usually discovered in a title search, that may impair the title to a property, and make its validity questionable. See: bad title.

Club
A group of underwriters who do not need to proceed to form a syndicate.

Cluster analysis
A statistical technique that identifies clusters of stocks whose returns are highly correlated within each cluster and relatively uncorrelated across clusters. Cluster analysis has identified groupings such as growth, cyclical, stable, and energy stocks.

CMO REIT
A very risky type of Real Estate Investment Trust investing in the residual cash flows of Collateralized Mortgage Obligation (CMOs). CMO cash flows are derived from the difference between the rates paid by the mortgage loan holders and the lower, shorter-term rates paid to CMO investors.

Co-financing
A type of financing in which the different lenders agree to fund under the same documentation and security packages but may have different interest rates, repayment profiles, and terms.

Co-manager
A second-tier Participant, ranked by size of participation.

Co-agent
An institution appointed by the