C shares are a type of mutual fund share. They are distinguished from A shares and B shares by their load (fee) structure. The main aspect that differentiates C shares from A shares a...
Read MoreA cabinet security is an inactive security (often a bond) that is listed on an exchange. Before the advent of computers, it was necessary to move physical evidence of securities and orders. When secu...
Read MoreThe CAC 40 Index is the benchmark tracking index for the Paris Bourse.Started in December of 1987 with a value of 1000, the CAC 40 is comprised of the 40 largest and most liquid stocks trading on...
Read MoreA cafeteria plan, also called a "tax-advantaged benefits plan", is a type of employee-benefit program recognized by section 125 of the Internal Revenue Code. Let's assume Company XYZ employs 100...
Read MoreA cage is a department in a brokerage firm. The cage is a physical location in which people at a brokerage firm handle physical securities and certificates. The location is called a cage be...
Read MoreCAGR stands for compound annual growth rate. A widely-used measure of growth, CAGR is used to evaluate anything that can fluctuate in value (such as assets and investments). It represent...
Read MoreA caisse populaire is a Canadian financial institution that is owned and controlled by its members rather than shareholders. It is essentially a credit union. Most are in Quebec. The members of the c...
Read MoreA calculation agent is a person or company that calculates how much the parties to certain derivatives owe each other. For example, consider an interest rate swap, which is a contractual agreement be...
Read MoreA calendar effect is a theory that stock prices will perform differently at different times of the year. There are many different calendar effects, including the Monday effect, "Sell in May and G...
Read MoreA calendar year is the period between January 1 and December 31. If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December 31, then Company XYZ's fiscal year i...
Read MoreIn the insurance industry, a calendar year experience (also called accident-year experience or underwriting-year experience) is the difference between the premiums earned and the losses incurred durin...
Read MoreA call date is the date after which a bond issuer can redeem a callable bond.Callable bonds usually have a call schedule. This is a series of call dates on or before which the issuer can redeem the bo...
Read MoreA call loan is a loan that the lender may force the borrower to repay at any time.Also called a broker loan or demand loan, a call loan is granted to a brokerage house that needs short-term capital fo...
Read MoreThe call loan rate, also known as the "broker loan rate", is the interest rate charged on the call loans used by brokerage houses to fund clients' margin trading accounts. When banks o...
Read MoreIn a call market, buy and sell orders are grouped together and then executed at specific times, rather than executed one by one continuously.Let's assume that the following buy orders for Company ...
Read MoreCall money is a very short-term bank loan that does not contain regular principal and interest payments. It is often used by brokerage firms to finance margin accounts.Let's assume that Broker XYZ...
Read MoreThe call money rate, sometimes known as the "broker loan rate," is the interest rate on the loans banks make to brokerage firms that are borrowing to fund transactions in their clients' margins a...
Read MoreA call on a call is a type of compound option. It is a call option on a call option. A call on a call is just one type of compound option; there are also puts on puts, puts on calls, and ca...
Read MoreA call on a put is a type of compound option. It is a call option on a put option. A call on a put is just one type of compound option; others include the put on a put, put on a call and ca...
Read MoreA call option is a contract between a buyer and a seller that gives the option buyer the right (but not the obligation) to buy an underlying asset at the strike price on or before the expiration d...
Read MoreThe phrase call over is used to describe the exercising of a call option.A call option gives its owner the right to buy an asset at a set price (the strike price) on or before a certain day (the expir...
Read MoreA call premium is the price of a call option. It is not the same as the strike price. Supply and demand of the call option determines its premium, but the famous Black-Scholes options...
Read MoreThe call price is the price a bond issuer or preferred stock issuer must pay investors if it wants to buy back, or call, all or part of an issue before the maturity date.The bond indenture will stipul...
Read MoreCall protection is a period of time during which a bond issuer cannot call, or buy back, a bond.Call protection is described in a callable bond's indenture. Callable corporate and municipal bonds ...
Read MoreA call provision is a clause in a bond's indenture granting the issuer the right to call, or buy back, all or part of an issue prior to the maturity date.The bond indenture will stipulate when and...
Read MoreA call ratio backspread is a trading strategy whereby an investor uses long and short option positions to simultaneously hedge against loss and maximize profit if stock prices go up. The strategy diff...
Read MoreA call report is a quarterly report that banks and all regulated financial institutions must file with the Federal Financial Institutions Examination Council (FFIEC). The formal name of the...
Read MoreCall risk is the risk that a bond issuer will redeem its bonds before they mature. Some bonds are callable, that is, the issuer has the right to call, or buy back all or some of the bonds b...
Read MoreThe call rule is a rule that requires the official opening price of a cash commodity to be near the previous day's closing price of that commodity.For example, let's assume that on June 1, the...
Read MoreCall warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securities (usually the issuer's common stock) at a certain price before a certain t...
Read MoreA callable bond gives the borrower (issuer) the right to pay back the obligation to the lender (bondholder) before the stated maturity date.A callable bond (also called a "redeemable bond") is...
Read MoreA callable certificate of deposit (callable CD) is a time deposit with a bank or financial institution. But unlike other CDs, callable CDs can be redeemed by the issuer before the maturity date. ...
Read MoreCallable common stock is an equity stake in a company where either the issuer or a third party has the right, but not the obligation, to repurchase the stock at a specific price after a certain da...
Read MoreIssuers of callable preferred stock have the right (but not the obligation) to repurchase the stock at a specific price after a certain date.For example, consider Company XYZ preferred stock...
Read MoreA callable security gives the issuer or a third party the right but not the obligation to repurchase the security at a specific price after a certain time. Let's assume you own 100 shares of Compa...
Read More"Called away" refers to an investing scenario in which one party to an options contract has the obligation to deliver an underlying asset to the other party to the contract.There are three com...
Read MoreCalPERS is the abbreviation for the California Public Employees' Retirement System. It is the nation's largest pension fund. The state of California is one of the nation's largest economies. More tha...
Read MoreA cambist is an expert in foreign exchange. In the old days, a cambist relied on interpreting books of information about exchange rates between various currencies. The term comes from the L...
Read MoreCAMELS is a system used to rate banks. In order to ensure their financial strength, banks must undergo periodic examinations by a federal agency (usually the Office of the Comptroller of th...
Read MoreCamouflage compensation is compensation that is not fully disclosed or is hard to identify. Let's say Company XYZ needs a new CEO. CEOs in the industry typically earn at least $1 million a year i...
Read MoreCAN SLIM is an investing system that uses seven fundamental and technical traits to pick stocks. The system, developed in the 1950s by Investor's Business Daily founder William J. O'Neil, relies on s...
Read MoreA Canada Learning Bond offers money to Canadian families to help them start saving for college. In general, under the program, the Canadian government gives families $500 in the form of a bond to sta...
Read MoreA Canadian income trust is a type of investment trust that holds stable, income-producing assets and pays out at least 90% of its net cash flows to its unitholders (shareholders are known as unitholde...
Read MoreA Canadian rollover mortgage is an adjustable-rate mortgage commonly available to homebuyers in Canada. An adjustable-rate mortgage (ARM) is a mortgage in which the interest rate varies. The loans ar...
Read MoreA canary call is a step-up bond that can't be called after a certain period. A step-up bond is a bond with a coupon that increases (“steps up”), usually at regular intervals, while th...
Read MoreCancel former order is a specific type of trade order a client places with a broker in order to cancel an unfilled buy or sell order.For example, if a client has an outstanding order to buy 100 shares...
Read MoreA canceled check is a check that has cleared or prevented from clearing. Let's say John Doe writes a $100 check to Jane Smith. She takes it to her bank to cash it. The bank takes the check, depos...
Read MoreIn the finance world, a canceled order is an order that is deleted before it is executed. Let's say Jane Smith calls her broker, John Doe, and tells him to buy 1,000 shares of Company XYZ. John p...
Read MoreIn the finance world, a cancellation is a notice informing a broker that a trade was made incorrectly. In the insurance world, a cancellation occurs when a policyholder stops paying the premium on an ...
Read MoreA cancellation bulletin is a list of credit cards that are reported stolen, canceled or compromised in some way. A cancellation bulletin is also called a "warning bulletin," "hot li...
Read MoreCancellation of debt occurs when a lender tells a borrower that he or she no longer must repay a loan. Let's assume that John Doe borrowed $100,000 from Bank XYZ for a luxury car. In the middle of th...
Read MoreCandlestick charts are often used in technical analysis to track price movements of securities, derivatives and currency over time.Each candlestick is made up of three parts: the upper shadow, the low...
Read MoreCapital is anything a business uses to generate income. In simple terms, capital is the potential for any item to create wealth. In the economic sense, capital comes in many forms: cur...
Read MoreA capital account is a national account that shows the changes in a nation's assets. These assets can be physical or financial. The capital account essentially is the left-hand side of a country&...
Read MoreCapital accumulation occurs when a company acquires assets. Capital accumulation also occurs when an institutional investor or other financial institution acquires a large position in a company ov...
Read MoreCapital appreciation (also called a capital gain) is an increase in the value of an investment. It is the difference between the purchase price (the basis) and the sale price of an asset. The for...
Read MoreFor firms, a capital asset is an asset that has a useful life longer than one year and is not intended for sale during the normal course of business. For individuals, capital asset typically re...
Read MoreThe capital asset pricing model (CAPM) is used to calculate the required rate of return for any risky asset. Your required rate of return is the increase in value you should expect to see based on the...
Read MoreCapital budgeting is the process of figuring out which projects are financially worth an investment. Let's assume Company XYZ is deciding whether to purchase a piece of factory equipment for $300,000...
Read MoreCapital decay occurs when a company's revenue suffers due to its use of old technology or processes. Let's say John Doe opens an ice cream stand. He buys a basic cash register at the office supply st...
Read MoreA capital dividend account is a special account that companies use to pay tax-free dividends to shareholders. Let's say five people pool their capital to form a company. They each contribute $10,...
Read MoreCapital expenditures, or capex, is money used to purchase, upgrade, improve, or extend the life of long-term assets. Long-term assets are typically property, infrastructure, or equipment with a useful...
Read MoreCapital flight is the movement of capital from one country to another, or sometimes from one investment sector to another, to capitalize on returns or mitigate risk. Let's say the Venezuelan gove...
Read MoreA capital gain is an increase in the value of an investment. It is the difference between the purchase price (the basis) and the sale price of an asset. The formula for capital gain is: ...
Read MoreCapital gains distributions are capital gains that are passed on to investment company shareholders.Let's assume that XYZ Company mutual fund invested well during the year and realized $1,000,000 ...
Read MoreA capital gains tax is a tax on the increase in the value of an investment. A capital gain is the difference between the purchase price (the basis) and the sale price of an asset. The formula for cap...
Read MoreCapital gains treatment refers to whether capital gains are taxed as short-term capital gains, long-term capital gains, or in another manner.Let's assume you purchase 100 shares of XYZ Company for...
Read MoreIn general, a capital improvement is a one-time expenditure for physical assets such as buildings, land, construction, landscaping or major equipment. Let's say Town XYZ wants to refurbish ABC El...
Read MoreA capital injection is an inflow of cash, stock or even debt into a company. Let's say Company XYZ is a private company and it wants to open 15 more stores in its retail chain. It raises money fr...
Read MoreCapital intensive refers to the degree that a company must invest money in physical or financial assets in order to produce a profit.Airlines, auto manufacturers, and drilling operations are often con...
Read MoreCapital IQ is a research division of Standard & Poor's. Essentially, Capital IQ provides research and analysis on companies. It also sells software and data feeds to investors and analy...
Read MoreA capital loss is a decrease in the value of an investment. It is the difference between the sale price and the purchase price (the basis) of an asset. The formula for capital loss is...
Read MoreThe capital markets are a source of financing for companies around the world. The most famous of the capital markets are the stock market and bond market. Companies utilize capital markets to rai...
Read MoreCapital stock is the number of shares that a company's charter authorizes for issuance. A corporate charter is a legal document that sets forth a corporation's basic information, such as its ...
Read MoreCapital structure refers to the blend of debt and equity a company uses to fund and finance its operations. If Company XYZ has completed an initial public offering and a bond offering, we could there...
Read MoreCapitalism is an economic and social system in which participants privately own the means of production -- called capital. Free market competition, not a central government or regulating body, dictate...
Read MoreIn the business world, capitalization has two meanings. The first meaning, also called market capitalization, refers to the value of a company's outstanding shares. The formula for market capitali...
Read MoreIn real estate, a capitalization rate is a measure of return on investment. The formula for capitalization rate is: Capitalization Rate = (Expected Income from Property – Fixed Costs &ndash...
Read MoreCapitalizing refers to the accounting practice of characterizing the costs of an asset purchase as a long-term asset on the balance sheet instead of an expense on the income statement. Companies ...
Read MoreA capitated contract is a health insurance policy that pays care providers a flat fee for each patient in the plan. For example, a capitated contract issued by Company XYZ might pay Dr. Smith, say, $...
Read MoreCapitulation occurs when investors attempt to exit an investment or market so quickly that they are willing to surrender any and all gains to do so. Panicked behavior often causes a capitulation, and ...
Read MoreThe Car Allowance Rebate System (CARS), also known as "cash for clunkers," was a U.S. federal government funded program that provided economic incentives for people to purchase a more fuel-eff...
Read MoreA car title loan is a short-term loan where a borrower uses the title of his or her car as collateral for the loan. Loans for car title loans are usually for less than 30 days and change a high rate ...
Read MoreDesigned to facilitate the sharing of stolen credit card information, a carding forum is an illegal website where fraudsters also share info, tips and techniques about obtaining credit card informatio...
Read MoreA cartel is a group of companies, countries or other entities that agree to work together to influence market prices by controlling the production and sale of a particular product.Cartels tend to spri...
Read MoreThe Case-Shiller Home Price Index refers to a set of indices released by Standard and Poor's that tracks changes in the value of residential real estate.There are several "Case-Shiller...
Read MoreCash is an asset that is in currency form. Although there is some leeway for judgment in particular situations, common examples of cash at the corporate level typically include bank account...
Read MoreUnder cash accounting, a business records revenue and expenses in the period in which they are actually received or paid, rather than in the period in which they are incurred.Let's assume Company ...
Read MoreA cash advance is a high interest loan typically taken out on a credit card or a line of credit from a bank. Interest on a cash advance begins accruing immediately upon disbursement.Suppose John uses ...
Read MoreCash and cash equivalents (CCE) are company assets in cash form or in a form that can be easily converted to cash.The balance sheet shows the amount of cash and cash equivalents at a given point in ti...
Read MoreCash budget is a review or projection of cash inflows and outflows. It can be used as a tool for analyzing the revenues and costs of a company or individual. A cash budget is a planning too...
Read MoreA cash cow is a business unit, product line, or investment that has a return on assets (ROA) greater than the market growth rate. The idiom refers to the idea that it produces "milk" (profit) ...
Read MoreA cash dividend is a cash payment made to the shareholders of a corporation. Generally, cash dividends are reported in dollars per share when discussing common stock. When discussing prefer...
Read MoreCash equivalents are company assets that are easily converted to cash. Although there is some leeway for judgment in particular situations, examples of cash equivalents include marketable securities a...
Read MoreCash flow is simply the cash expected to be generated by an investment, asset or business. As an investor, you buy a dividend-paying stock. You purchase the stock for $10 and the company pays you...
Read MoreCash flow after taxes (CFAT) is a measure of a company's ability to generate positive cash flow after deducting taxes.The general formula for CFAT is:CFAT = Net Income + Depreciation + Amortizatio...
Read MoreThe section of the cash flow statement titled Cash Flow from Financing Activities accounts for inflows and outflows of cash resulting from debt issuance and financing, the issuance of any new stock, d...
Read MoreCash from investing activities is a section of the cash flow statement that provides information regarding a company's purchases or sales of capital assets.A statement of cash flows typically brea...
Read MoreCash flow from operating activities measures the cash-generating abilities of a company's core operations (rather than its ability to raise capital or buy assets). Put another way, cash f...
Read MoreA cash flow loan is a loan, usually to a company, intended to meet daily cash needs during times when cash flow is inconsistent. These loans are short-term in nature; borrowers usually must repay them...
Read MoreCash flow per share represents the portion of a company's cash flow allocated to each share of common stock. Cash flow per share can be calculated by dividing cash flow earned in a given re...
Read MoreCash flow plans are strategic documents companies make in order to forecast their cash inflows and outflows over several periods. In the insurance world, cash flow plans refer to coordinating the paym...
Read MoreThe cash flow return on investment (CFROI) measures a company's cash return on invested assets. It is determined by dividing a company's gross cash flow by its gross investment.A company inves...
Read MoreA cash flow statement is the financial statement that measures the cash generated or used by a company in a given period.A cash flow statement typically breaks out a company's cash sources and use...
Read MoreCash flow to capital expenditures is the ratio of a company's cash from operations to its capital expenditures for acquiring or upgrading assets, such as buildings or equipment, required to improv...
Read MoreIn the insurance business, cash flow underwriting is the equivalent of selling below cost. For example, let's assume Insurance Company XYZ decides to engage in cash flow underwriting for its ...
Read MoreA cash market is a market for securities or commodities in which the goods are sold for cash and delivered immediately. In some cases, "immediate" means one month or less. For example, foreign exc...
Read MoreA cash out refinance (also called a cash out refinance loan or cash out refinance mortgage) is a type of mortgage loan that lets you to turn the equity you have in your home into cash, similar to ...
Read MoreAlso called the spot price or the current price, a cash price is the current price of a commodity if it were to be sold or purchased today. For example, if you purchase a cup of coffee in a restauran...
Read MoreA cash settlement is a payment in cash for the value of a stock or commodity underlying an options or futures contract upon exercise or expiration.Options and futures contracts are valued based on an ...
Read MoreCash-flow matching is an investing strategy for investors who need to fund a series of future cash needs. Buy-and-hold and indexing strategies are about generating steady rates of return in a por...
Read MoreCash back, or cashback, often refers to the cash benefit paid to a credit card user after a certain amount is charged on their credit card. The cash back reward is offered by card issuers as a loyalty...
Read MoreA cashier's check is a check that guarantees the availability of the underlying funds because it is drawn upon and issued by the bank itself.To obtain a cashier's check, a person must first de...
Read MoreA catalyst is news or information that changes a pricing trend in a security.Let's assume that Company XYZ announces earnings that far exceed analysts' expectations. This information could ser...
Read MoreCatastrophe calls are provisions in bonds that allow the issuer to call the bonds if the item built or produced by the bond is destroyed. Let's assume ABC Town wants to build a new toll road, but...
Read MoreA category killer is a large, dominant company that is more efficient but less specialized than other merchants in a particular niche or industry. Wal-Mart is a classic example of a category killer. ...
Read MoreCaveat emptor is Latin for let the buyer beware, meaning the buyer assumes the risk in a transaction. Garage sales are great examples of caveat emptor. Buyers purchase goods as is and have ...
Read MoreA CD ladder is an investing strategy whereby the investor staggers the maturity of ("ladders") the certificates of deposit in his portfolio so that the proceeds can be reinvested at regular intervals....
Read MoreA central bank is an institution responsible for determining the monetary policy of a nation or group of nations. Exact duties vary by country, but generally a central bank's main goals are t...
Read MoreA certificate of deposit (CD) is a relatively low-risk debt instrument purchased directly through a commercial bank or savings and loan institution.The certificate of deposit indicates that the i...
Read MoreA for-profit service run by the Promontory Interfinancial Network, the Certificate of Deposit Account Registry Service (CDARS) allows investors to purchase certificates of deposit (CDs) across a n...
Read MoreA certificate of insurance, or COI, is issued by an insurance company or insurance broker. The COI summarizes the details and conditions of the policy, including effective dates, types and limits of c...
Read MoreA certified check is a check for which the issuing bank guarantees payment.Let's assume you want to rent an apartment from the XYZ Leasing Company but your credit is bad. XYZ Leasing Company may r...
Read MoreCertified Financial Planner (CFP) is a professional designation attained by a financial planner or advisor who has successfully completed the requirements set by the Certified Financial Planner B...
Read MoreRelatively new to the financial planning and advice sector, a Certified Kingdom Advisor (CKA) is a professional certification for financial advisors who work with clients who take a Christian values b...
Read MoreThe certified public accountant (CPA) designation is a professional designation granted by the American Institute of Certified Public Accountants (AICPA). It is given to individuals who pass the Unifo...
Read MoreThe CFA (Chartered Financial Analyst) exam is a professional qualification exam administered as a requirement to earn the CFA designation. The three levels of the exam are offered annually by CFA Inst...
Read MoreThe CFA Institute issues the CFA designation. CFA stands for Chartered Financial Analyst. A CFA charter signifies a mastery of investment management principles and usually takes at least three yea...
Read MoreChapter 10 (formally referred to as Chapter X) is a former portion of the bankruptcy code that dictated bankruptcy processes and procedures for companies and individuals. Chapter X was originally par...
Read MoreChapter 11 bankruptcy refers to the section of U.S. bankruptcy law under which companies and individuals can attempt to restructure their debts in order to repay them. Individuals, par...
Read MoreChapter 13 refers to the section of U.S. bankruptcy law under which individuals may attempt to restructure their finances in order to repay their debts. Individuals, the self-employed, and those oper...
Read MoreChapter 7 refers to the section of U.S. bankruptcy law under which companies and individuals liquidate their assets in order to repay their debts. Individuals, partnerships, or corporations...
Read MoreChapter X was a portion of the bankruptcy code that dictated bankruptcy processes and procedures for corporations. 1978 was the last year corporations were able to file bankruptcy under Chapter X.Chap...
Read MoreA charge card is a plastic card issued by a financial institution that allows the user to make purchases with funds borrowed from that financial institution. Colloquially speaking, a charge card is t...
Read MoreA chargeback protects cardholders from unsatisfactory sales and service by letting the cardholder demand a "refund" directly from the credit card issuer. If a customer successfully disputes a credit c...
Read MoreA Chartered Financial Analyst (CFA) is a highly-respected designation attained by an investment professional who has successfully completed all three parts of the CFA exam. Because it's s...
Read MoreA Chartered Investment Counselor (CIC) is an individual certified by the Investment Counsel Association. The certification is available to CFA holders who are currently registered as investment adviso...
Read MoreA Chartered Market Technician (CMT) is an individual who has been certified by the Market Technicians Association.The Market Technicians Association (MTA) grants the Chartered Market Technician (CMT) ...
Read MoreThe Chartered Trust and Estate Planner (CTEP) accreditation is issued by the American Academy of Financial Management (AAFM) for financial professionals who have demonstrated expertise in dealing with...
Read MoreCheckable deposits are bank accounts against which checks can be drawn. There are different types of checkable accounts offered by retail banks and credit unions: deposit accounts, interest-bearing ac...
Read MoreThe Chicago Board of Trade (CBOT) is a commodity futures and options exchange. Several dozen types of contracts trade on the CBOT, and the exchange facilitates hundreds of millions of these trades...
Read MoreThe Chicago Board Options Exchange (CBOE) is an exchange used for trading standardized options contracts, including stock options, LEAPS, interest rate options, foreign currency options, and index opt...
Read MoreThe Chicago Mercantile Exchange (CME) is a commodities futures and options exchange. Several dozen types of contracts trade on the CME, and the exchange facilitates hundreds of millions of these trade...
Read MoreThe chief executive officer (CEO) oversees the entire operation of a company or organization. A CEO is responsible for coordinating effective operating, marketing, financial, cultural and legal strate...
Read MoreThe chief financial officer (CFO) oversees the financial operation of a company or organization.The CFO's job is to coordinate effective financial, accounting and tax strategies to maximize shareh...
Read MoreThe chief operating officer (COO) is responsible for executing and implementing the operational directives set by the CEO and the board of directors. Whereas the CEO is responsible for the overall lea...
Read MoreThe child tax credit is a tax-bill reduction given to people with qualifying children under 17 years old.The Internal Revenue Service (IRS) allows taxpayers to reduce their federal income taxes by a f...
Read MoreBanks offer different types of savings accounts any time of year. A way to save money toward holiday shopping and seasonal spending is a Christmas Club account. It is marketed to savers as an incentiv...
Read MoreClass A shares are either 1) common stocks or 2) preferred stocks that offer enhanced benefits, such as greater voting rights and a higher dividend priority. For example, let’s say Joe purc...
Read MoreClass action is a type of civil lawsuit brought by a group of people who are "similarly situated" -- that is, they have been harmed in a similar way. In the business world, this group is most ...
Read MoreClass B shares are either 1) common stocks or 2) preferred stocks that generally give fewer benefits to shareholders than class A shares. For example, Joe purchases stock in company XYZ.&nb...
Read MoreA clean up call, also known as a calamity call, is a feature of a collateralized mortgage obligation (CMO) that requires the issuer to pay off a portion of the CMO if the underlying mortgages don't ge...
Read MoreA clearinghouse is an intermediary between buyers and sellers of financial instruments.Clearinghouses take the opposite position of each side of a trade. When two parties agree on the terms of a trans...
Read MoreA closed end lease, also called a "walk away lease", is usually a kind of car lease that allows the lessee to return the car at the end of a lease period. Let's assume John Doe leases ...
Read MoreA closed end fund (CEF) is a publicly-traded security that offers its shareholders partial ownership in an underlying portfolio of assets. Closed-end funds initially raise capital through an ini...
Read MoreThe closing bell is a term used to describe the time that an exchange's daily trading session ends.Each trading day, the New York Stock Exchange (NYSE) rings its bell at 4 p.m. Eastern, signifying...
Read MoreClosing costs are fees and expenses paid by both the buyer and the seller when a transaction is completed. Closing costs are common expenses in real estate transactions. Closing costs are most common...
Read MoreA closing price is the trading price of a security at the end of the trading day. In real estate, it is the price at which a piece of property sells. The New York Stock Exchange has the most famous cl...
Read MoreA closing quote is the trading price of a security at the end of the trading day. The New York Stock Exchange has the most famous closing bell (so famous that the term has a service mark). ...
Read MoreThe CNN effect refers to a major negative impact on consumer spending as a result of breaking news.CNN (which was later joined by MSNBC, BBC World News and Fox News) offers minute-by-minute updates on...
Read MoreAlso called tag-along rights, co-sale rights allow minority shareholders to sell their stakes in a company if a majority shareholder wishes to sell its stake in a company. Let's say Company XYZ i...
Read MoreCockroach theory refers to the notion that unfavorable reports about a company will, once publicized, be followed by similar reports about other companies in the industry.Named in reference to the pop...
Read MoreCoinsurance, commonly used in health insurance, is the percentage that the insurer pays for a medical claim on behalf of the insured patient after the deductible has been met. Property c...
Read MoreA coinsurance clause in regards to property insurance specifies a minimum percentage of a property's assessed cash or replacement value that it must be insured for (typically 80% or 90%). If...
Read MoreA collar option strategy, also known as a "hedge wrapper," is used to lock in the maximum gain and maximum loss of a stock. To execute a collar, an investor buys a stock and an out-of-the-money put op...
Read MoreCollateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation.Let's assume you...
Read MoreCollateralization occurs when a company pledges an asset to a lender (usually in return for a loan). The lender has the right to seize the collateral if the borrower defaults on the obligation. Let&rs...
Read MoreA collateralized bond obligation (CBO) is a bond that uses a variety of high-yield junk bonds as collateral. These bonds are separated, or pooled, into tranches with higher and lower levels of risk.Ju...
Read MoreA collateralized debt obligation (CDO) is a security that repackages individual fixed-income assets into a product that can be chopped into pieces and then sold on the secondary market. They are c...
Read MoreA collateralized mortgage obligation (CMO) is a fixed income security that uses mortgage-backed securities as collateral. Like other structured securities, CMOs are subdivided into graduated ris...
Read MoreThe College Work Study Program (CWSP) is a type of financial aid that a school awards to a student who has completed a FAFSA and has demonstrated a financial need. The student is given a job (usually ...
Read MoreCollision insurance is insurance coverage that helps to cover the costs to repair or replace an automobile after an accident. A vehicle is typically covered if the insured driver is at fault and th...
Read MoreCollusion, also known as price rigging or price fixing, occurs when several individuals and/or businesses agree to set the price for something. For example, let’s assume that there ar...
Read MoreA combination trade is an option strategy where the trader takes a position in both call and put options in the same underlying stock. While there are multiple types of combination trades, in this sec...
Read MoreA command economy (also known as a “planned economy”) occurs when decisions about the production and allocation of all goods and services are made by one central government authority. C...
Read MoreCommerce is the exchange of goods, services or commodities on a large scale. Nearly every business transaction is a form of commerce: purchasing food at a restaurant, buying stocks on the stock marke...
Read MoreA commercial bank is a financial institution that offers checking accounts, demand deposits, business and personal loans, savings vehicles and a variety of other related financial services. Commercia...
Read MoreA commercial mortgage-backed security (CMBS) is a fixed-income security, typically in the form of a bond, which uses commercial real estate loans as collateral.A CMBS is comprised of numerous commerci...
Read MoreCommercial paper is an unsecured and discounted promissory note issued to finance the short-term credit needs of large institutional buyers. Banks, corporations and foreign governments commonly use th...
Read MoreCommercial real estate is any property that is exclusively used for business activity. Commercial real estate is any non-residential property used for commercial profit-making purposes. Commercial re...
Read MoreA commission is a fee paid to an agent as compensation for executing a transaction. It is calculated either as a percentage of the transaction value or as a flat fee.Let's assume you would like to...
Read MoreCommodification, also known as "commoditization", refers to a good or service becoming indistinguishable from similar products. To be considered a commodity, an item must satisfy three condition...
Read MoreA commodity is any homogenous good traded in bulk on an exchange. Grain, precious metals, electricity, oil, beef, orange juice, and natural gas are traditional examples of commodities...
Read MoreThe Commodity Futures Trading Commission (CFTC), was established in 1974 as an independent government agency with the purpose of regulating commodity futures and options markets. The Commod...
Read MoreA commodity index is an index of the prices of items such as wheat, corn, soybeans, coffee, sugar, cocoa, hogs, cotton, cattle, oil, natural gas, aluminum, copper, lead, nickel, zinc, gold and silver....
Read MoreA commodity market is a place where buyers and sellers can trade any homogenous good in bulk. Grain, precious metals, electricity, oil, beef, orange juice and natural gas are traditional examples of c...
Read MoreCommodity parity price refers to the price of a commodity based on a single price or average of prices during a previous span of time.A commodity's parity price is a benchmark price against which ...
Read MoreThe Commodity Research Bureau Index (CRB) tracks the general trend of the commodities markets.The CRB Index gauges the collective price trend of the commodities markets. Calculated by the Commodi...
Read MoreCommon stock represents ownership interests in corporations. The most prominent characteristics of common stock are that they entitle the shareholder to vote on corporate matters (typically...
Read MoreA common-size balance sheet is a balance sheet in which each line item is expressed as a percentage of assets. For example, let's assume that Company XYZ's balance sheet looks like this: T...
Read MoreA common-size financial statement is an income statement or balance sheet in which each line items are expressed as a percentage of sales or assets, respectively. For example, let's assume that C...
Read MoreA common-size income statement is an income statement in which each line item is expressed as a percentage of sales. For example, let's assume that Company XYZ’s income statement looks like...
Read MoreA firm's comparative advantage is its ability to produce a good or service at a lower opportunity cost than another entity. Famed economist David Ricardo first coined the term "comparative advantage"...
Read MoreA composite is a grouping of securities, indexes or other items. One of the most well-known composites in the finance world is the Dow Jones Composite Average, which is a price-weight...
Read MoreA composite average is an average of the components of other averages. For example, the Dow Jones Composite Average is a price-weighted index of the companies that compose the Dow Jones Industrial Av...
Read MoreIn finance, to compound means to earn interest on principal plus interest that was earned earlier. You have $100 to open a savings account at XYZ Bank on January 1. The annual interest rate is 5%. Ho...
Read MoreThe financial world often refers to compound interest as magic. Compound interest can be thought of as “interest building on interest” which adds to your principal. In layman’s terms, it’s a f...
Read MoreA compound option is the opportunity to buy or sell an option. Let’s assume John Doe buys a call on an option to purchase 100 shares of Company XYZ at $25 per share by March 31. He pays $...
Read MoreCompounding is the process of the exponential increase in the value of an investment due to earning interest on both principal and accumulated interest.Let's assume you have $100 to open a savings...
Read MoreA condominium, often shortened to condo, is a multi-unit property where units are individually owned. Ownership typically includes an interest in common properties, like sidewalks, lobbies, and poo...
Read MoreA conglomerate is a corporation made up of several smaller, independently-run companies which may operate across several sectors and industries.Conglomerates are generally formed for two reasons: to d...
Read MoreA consensus estimate is a shared prediction of a company's quarterly or annual earnings per share. Securities analysts are tasked with the job of making earnings estimates for the companies they c...
Read MoreA conservatorship is the legal establishment of a court appointed manager for the personal and financial affairs of someone who is legally incapacitated, also referred to as a ward. The ward may be...
Read MoreConsignment is an agreement between an owner and a third-party consignee whereby the consignee agrees to sell the owners goods in exchange for a fee. Consignment is an arrangement in which an i...
Read MoreIn the accounting world, to consolidate means to combine the financial statements of a company and all of its subsidiaries, divisions or suborganizations. Let's assume Company XYZ is a holding co...
Read MoreConsolidated financial statements are the combined financial statements of a company and all of its subsidiaries, divisions, or suborganizations.Let's assume Company XYZ is a holding company that ...
Read MoreConsolidated Reports of Condition are reports that are filed quarterly by banks and all regulated financial institutions with the Federal Financial Institutions Examination Council (FFIEC) ...
Read MoreIn business, consolidation refers to the merger of several companies in a specific industry, which typically concentrates market share in the hands of a few large companies.Perhaps one of the mos...
Read MoreAlso called real GDP, constant-price gross domestic product (GDP) is inflation-adjusted GDP. Gross domestic product (GDP) is the broadest quantitative measure of a nation's total economic activit...
Read MoreSometimes referred to as a “self build loan,” a construction loan is a loan that is used to finance the construction of a new home or some other type of real estate project. The loan is made to th...
Read MoreThe Consumer Confidence Index (CCI) is an index based on the monthly Consumer Conference Board survey that measures consumer sentiment regarding current and future economic conditions. note that the C...
Read MoreConsumer cyclical refers to a stock or group of stocks that are affected by changes in the economic cycle. Consumer cyclicals perform well when the economy grows and suffer when the economy stagnates...
Read MoreConsumer durables are a category of consumer products that do not have to be purchased frequently because they last for an extended period of time (typically more than three years). Consume...
Read MoreCreated by President Obama’s Administration in 2010, the Consumer Financial Protection Bureau (CFPB) serves as a federal watchdog over the consumer financial industry. Responsible for regulating ...
Read MoreThe consumer price index (CPI) measures changes in consumer prices. The Bureau of Labor Statistics (BLS) calculates and publishes CPI data monthly. The CPI is the most recognized inflation measure...
Read MoreConsumer staples are household necessities -- products that most of us use on an everyday basis and would continue to use with little regard to their cost or the overall economy.Examples of consumer s...
Read MoreContactless payment technology allows transactions through a chip embedded in payment cards, tags, key fobs, or mobile phones. A chip or QR code communicates with a reader device using radio frequency...
Read MoreContango occurs when the current futures price of an asset (as quoted in the futures market) is higher than the current spot price of the underlying asset.There is a relationship between the spot pric...
Read MoreAlso called a back-end load, a contingent deferred sales charge is a fee paid to sell a specific investment. It is expressed as a percentage of the amount invested, and may also be called an exit fee ...
Read MoreAlso called the Zaraba method, the continuous auction method is a method of trading securities. In the continuous auction method, which many Japanese exchanges use, the exchange fills orders ...
Read MoreA contrarian is an investor that attempts to profit by deviating from conventional wisdom or "the herd." Generally, the basic premise behind contrarian investment methods is that the mark...
Read MoreContribution margin is a measure of profit per unit; it is used to tell a business how profitable each of their products is by calculating how much each product can contribute to revenues. The ...
Read MoreA conventional loan is a mortgage that is not insured or guaranteed by a government agency. Also known as a conventional mortgage, conventional loans are usually fixed-rate loans. Conventional mort...
Read MoreA conversion ratio is the number of one security given for another security (usually a convertible security). For example, convertible preferred stock is preferred stock that holders can exchange for ...
Read MoreA convertible bond gives the bondholder the right to convert the bond into a fixed number of shares of common stock in the issuing company.For example, consider a Company XYZ bond with a $1,000 par va...
Read MoreConvertible preferred stock is preferred stock that holders can exchange for common stock at a set price after a certain date.Let's assume you purchase 100 shares of XYZ Company convertible prefer...
Read MoreIn the bond world, convexity refers to the shape of the yield curve and how sensitive bond prices are to changes in interest rates. The degree to which a bond's price changes when interest ...
Read MoreCore earnings are the net income a company generates from the principle products and services it provides.The concept of core earnings was developed by Standard & Poor's (S&P) in order to ...
Read More"Cornering the market" refers to the process of acquiring enough shares of a certain security or asset with the intention of illegally manipulating its price.Let's assume you want to profi...
Read MoreCorporate bonds are debt instruments created by companies for the purpose of raising capital. They are called fixed-income securities because they pay a specified amount of interest on a regular basis...
Read MoreAlso called "articles of incorporation" or a "certificate of incorporation," a corporate charter is a legal document that sets forth a corporation's basic information, such as its location, profi...
Read MoreCorporate governance is the process and rules under which a company is managed on the behalf of shareholders and stakeholders. The board of directors is primarily responsible for applying and maintain...
Read MoreCorporate inversion is practice by U.S.-based companies of exchanging their registration with a subsidiary outside the U.S. in order to pay lower taxes. Many large companies in the U.S. hav...
Read MoreCorporate profit, also called net income, is the amount remaining after all costs, depreciation, interest, taxes, and other expenses have been deducted from total sales. Profit is also referred to as ...
Read MoreCorporate Social Responsibility, or CSR, is a system of self-regulation for a business to become and remain socially accountable to its customers, employees, peers, and community. Under CSR, ...
Read MoreA corporation is one of many ways to formally organize a business. Structuring a business as a corporation has a number of important legal requirements and consequences that impact investors. ...
Read MoreA correction refers to a price decline of at least 10% of any security or market index after a temporary increase in market prices.The stock market's value is always rising and falling. Sometimes,...
Read MoreCorrelation, as used in investing, is a measure of the return performance of two (or more) securities or asset classes relative to each other. Portfolio managers, traders, brokers, and stock...
Read MoreCost basis refers to the original price of an asset. Cost basis is sometimes called tax basis. Let's assume you purchase 100 shares of XYZ Company stock for $5 per share, and you pay a $10 ...
Read MoreCost-benefit analysis is used to analyze a potential investment that will impact a business. Whether a company is looking to purchase a new property – or expand its operations – cost benefit a...
Read MoreCost of capital can best be described as the ability to cover both asset and liability expenditures while generating a profit. In a nutshell, it’s a rate of return that helps companies ...
Read MoreCost of equity refers to a shareholder's required rate of return on an equity investment. It is the rate of return that could have been earned by putting the same money into a different investment wit...
Read MoreCost of goods sold (COGS) is an accounting term to describe the direct expenses related to producing a good or service. COGS is listed on the income statement. For goods, COGS is primarily ...
Read MoreCost per thousand (CPM) is a marketing term referring to the cost of a media vehicle reaching 1,000 members of an audience. The M in CPM is the Roman numeral for 1,000.The formula for cost per thousan...
Read MoreCost per unit is a measure of a company's cost to build or create one unit of product. For example, let's assume it costs Company XYZ $10,000 to purchase 5,000 widgets that it will resell in its reta...
Read MoreCottage industry is a production system that relies on producing goods, or parts of goods, by craftsmen at home, or small workshops, by individuals, small teams or family units instead of large factor...
Read MoreA countercyclical stock is a stock whose price tends to move in opposition to the overall business cycle. When the market rises, the stock price falls, and when the market falls, the stock price moves...
Read MoreCountry risk is the risk that a foreign government will default on its bonds or other financial commitments. Country risk also refers to the broader notion of the degree to which political a...
Read MoreA coupon bond, frequently referred to as a "bearer bond," is a bond with a certificate that has small detachable coupons. The coupons entitle the holder to interest payments from the borrower...
Read MoreThe coupon equivalent rate (CER), also known as the bond equivalent yield (BEY), is the effective yield on a zero-coupon bond when calculated as if it paid a coupon.To calculate the coupon equiva...
Read MoreThe coupon equivalent yield is the effective annual interest rate earned on a bond. It is used to understand what the annual return is or would have been on an investment lasing less than one year...
Read MoreIn the finance world, the coupon rate is the annual interest paid on the face value of a bond. It is expressed as a percentage. The term "coupon rate" comes from the small detachable c...
Read MoreA covenant is a promise a company makes, usually in return for a loan or bond issue.Covenants are most common in lending agreements and bond indentures. They can be financial or operational in nature....
Read MoreA coverage ratio divides a company's income or cash flow by a certain expense in order to determine financial solvency.Some of the most common coverage ratios include the fixed-charge coverage rat...
Read MoreA covered call is a call option that is sold against stock an investor already owns.For example, assume that on January 1, Charlie owns 100 shares of IBM stock. IBM currently trades at $100, but Charl...
Read MoreCredit is an agreement whereby a financial institution agrees to lend a borrower a maximum amount of money over a given time period. Interest is typically charged on the outstanding balance. In the...
Read MoreA credit bureau is an agency that collects, organizes, and disseminates credit information to creditors and potential creditors. Credit bureaus generally collect information on individuals and small b...
Read MoreA credit card is issued by a financial institution that lets you borrow money to make a purchase. According to a recent Experian report, the average American holds 4 credit cards. Not only are credit ...
Read MoreThe Credit Card Accountability, Responsibility, and Disclosure Act is better known as the Credit CARD Act. The law's main purpose is to prevent certain business practices in the credit card industry t...
Read MoreA credit card balance is the total amount of money owed on a credit card account. Whenever a purchase is made, the balance increases. Conversely, whenever a payment is made, the balance decreases....
Read MoreA credit crunch occurs when loans are very expensive and difficult to obtain.During a credit crunch, lending institutions are limited as to the amount of funds they can use to make loans. Lenders are ...
Read MoreA credit default swap (CDS) protects lenders in the event of default on the part of the borrower by transferring the associated risk in return for periodic income payments.In a credit default swa...
Read MoreA credit derivative is a financial instrument thats value is determined by the default risk of an underlying asset.Credit derivatives allow a lender or borrower to transfer the default risk of a loan ...
Read MoreA credit limit is the maximum amount that a person may charge on a credit card or borrow from a financial institution. After a financial institution has approved an applicant's request for a credit c...
Read MoreCredit quality is a measure of an individual's or company's creditworthiness, which is ability to repay debt. A FICO score, which is created and calculated by the Fair Isaac Corporation, is a...
Read MoreIn personal finance, the term credit rating commonly refers to a score issued by the Fair Isaac Corporation (a "FICO score"). A person's credit rating indicates how creditworthy he or she is. In co...
Read MoreA credit report is a report detailing a person's financial history specifically related to their ability to repay borrowed money. There are three major credit bureaus in the United States: TransUnion...
Read MoreCredit risk is the chance that a bond issuer will not make the coupon payments or principal repayment to its bondholders. In other words, it is the chance the issuer will default. While the definitio...
Read MoreCredit score refers to the FICO score, which is created and calculated by the Fair Isaac Corporation and is a measure of an individual's creditworthiness. It is a mathematical summary of the informati...
Read MoreA credit spread is the difference between the yields of two bonds that offer the same coupon and have the same maturity. Since yield reflects the risk of a bond, the credit spread reflects the differe...
Read MoreA credit union is a financial institution that is owned and controlled by its members rather than shareholders. The members of the credit union pool their deposits and provide loans and other financia...
Read MoreThe credit utilization rate is a calculation comparing an individual's total debt balances to total available credit. The credit utilization rate is also referred to as the credit utilization ratio. ...
Read MoreCredit utilization, commonly referred to as the credit utilization ratio or credit utilization rate, is a calculation comparing an individual's total debt balances to total available credit. The...
Read MoreA creditor is an individual or institution that lends money or services to another entity under a repayment agreement. There are generally two types of creditors: personal and real. Personal creditor...
Read MoreCritical mass refers to the size a company needs to reach in order to efficiently and competitively participate in the market. This is also the size a company must attain in order to sustain growth an...
Read MoreCross-listing (also known as interlisting or dual listing) is the listing of any security on two or more different exchanges. Let's assume Company XYZ is a Canadian public company that lists...
Read MoreThe crowding out effect describes the idea that large volumes of government borrowing push up the real interest rate, making it difficult or close to impossible for individuals and small companies to ...
Read MoreA cumulative dividend is a dividend, usually on preferred shares, that must be paid before any other dividends on any of the issuer's other securities. Preferred stock that does not carry a cumula...
Read MoreCurrency is a medium of exchange for goods or services within an economy.Currency can be either fiat or tied to an underlying asset. Fiat money has no intrinsic value and is backed by the full faith a...
Read MoreCurrency risk, also called foreign-exchange risk or exchange-rate risk, is the risk that changes in the relative value of certain currencies will reduce the value of investments denominated in a forei...
Read MoreCurrent assets (sometimes called current accounts) are any company assets that can be converted into cash within one fiscal year. There are multiple ways these assets can be converted, including s...
Read MoreA current liability is a liability due in less than one year. A liability is a claim on a company's assets. Technically, a liability is a required transfer of assets or services that must o...
Read MoreThe current portion of long-term debt (CPLTD) is the portion of a company's long-term debt payments that are due in less than one year. For example, let’s assume that XYZ Company ...
Read MoreThe current ratio is the ratio of current assets to current liabilities. The current ratio is a commonly used liquidity ratio that measures a company's ability to pay its current liabilities with its...
Read MoreCurrent yield represents the prevailing interest rate that a bond or fixed income security is delivering to its owners. The formula for current yield is defined as follows: CY = Annual interest pa...
Read MoreCUSIP stands for "Committee on Uniform Securities Identification Procedures" and refers to a 9-digit alphanumeric code assigned to all security issues approved for trading in the United States...
Read MoreA custodian is an institution or individual that can act as an agent and exercise legal authority over the financial assets of another individual or company. A custodian typically handles a variety o...
Read MoreA cyclical industry is an industry whose performance (revenues, profits, etc.) is tied to the business cycle. Thus, when the economy is grows quickly, the industry does well and vice versa.Cyclical in...
Read MoreCyclical stocks are those that tend to move strongly higher and lower along with the overall business cycle. These stocks represent ownership in companies that are very sensitive to economic fluctuati...
Read MoreCyclical unemployment is the fluctuating rate of unemployment resulting from swings in the business cycle.This type of unemployment increases during a recession and decreases during an expansion. Busi...
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