Definitions Starting with "C"

C Shares

C shares are a type of mutual fund share.   They are distinguished from A shares and B shares by their load (fee) structure. Read more

Cabinet Security

A 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. Read more

CAC 40 Index

The 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 the exchange. Read more

Cafeteria Plan

A 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 people and would like to start offering health insurance. Read more


A 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. Read more

CAGR - Compound Annual Growth Rate

CAGR 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). Read more

Caisse Populaire

A caisse populaire is a Canadian financial institution that is owned and controlled by its members rather than shareholders. It is essentially a credit union. Read more

Calculation Agent

A 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 between two parties to exchange interest payments. Read more

Calendar Effect

A 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 Go Away," and the October effect. Read more

Calendar Year

A 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 is said to be on a calendar year basis. Read more

Calendar Year Experience

In 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 during a calendar year. Let's say Company XYZ had 1,000 customers, each of whom has a policy that has a $5,000 annual premium. Read more

Call Date

A call date is the date after which a bond issuer can redeem a callable bond. Callable bonds usually have a call schedule. Read more

Call Loan

A 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 for financing clients' margin portfolios. Read more

Call Loan Rate

The 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 or other lenders provide brokerage houses with call loans to help cover their clients' margin accounts, they charge an interest rate called the call loan rate. Read more

Call Market

In 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 XYZ stock are received: Buy 1,000 shares @ $4. Read more

Call Money

Call 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. Read more

Call Money Rate

The 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 accounts. The call money rate is a rate that is generally not available to individuals. Read more

Call on a Call

A call on a call is a type of compound option. It is a call option on a call option. Read more

Call on a Put

A call on a put is a type of compound option. It is a call option on a put option. Read more

Call Option

A 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 date. The buyer pays a premium to the seller in exchange for this right. Read more

Call Over

The 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 expiration date). Read more

Call Premium

A call premium is the price of a call option. It is not the same as the strike price. Read more

Call Price

The 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 stipulate when and how a bond can be called, and there are usually multiple call dates throughout the life of a callable bond. Read more

Call Protection

Call 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. Read more

Call Provision

A 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 how the bond can be called, and there are usually multiple call dates throughout the life of a callable bond. Read more

Call Ratio Backspread

A 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 differs from butterfly spreads and condor spreads in that it has unlimited upside potential. Read more

Call Report

A 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 call report is the Consolidated Reports of Condition and Income. Read more

Call Risk

Call 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 before they mature. Read more

Call Rule

The 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 price of gold is $1,000 an ounce at the end of the trading day. Read more

Call Warrant

Call 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 time. Occasionally, companies offer call warrants (usually simply called "warrants") for direct sale or give them to employees, but the vast majority of call warrants are "attached" to newly issued bonds or preferred stock. Read more

Callable Bond

A 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 a bond with an embedded call option. Read more

Callable Certificate of Deposit (Callable CD)

A 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 more

Callable Common Stock

Callable 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 date. Let's assume you own 100 shares of Company XYZ callable common stock. Read more

Callable Preferred Stock

Issuers 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 issued in 2000, paying a 10% rate, maturing in 2020, and callable in 2010 at 102% of par. Read more

Callable Security

A 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 Company XYZ callable common stock. Read more

Called Away

"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 common situations in which an asset may be called away: Callable Bond is Redeemed Before Maturity Callable bonds give the company issuing the bonds the option to redeem them (or buy them back from you) before the designated maturity date. Read more


CalPERS is the abbreviation for the California Public Employees' Retirement System. It is the nation's largest pension fund. Read more


A 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. Read more


CAMELS 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 the Currency). Read more

Camouflage Compensation

Camouflage compensation is compensation that is not fully disclosed or is hard to identify. Let's say Company XYZ needs a new CEO. Read more


CAN 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. Read more

Canada Learning Bond

A 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 start saving for college. Read more

Canadian Income Trust

A 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 unitholders in trust lingo). These trusts usually hold assets such as oil, coal, natural gas, or other natural resources, which generally have a steady demand and therefore steady revenues. Read more

Canadian Rollover Mortgage

A 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. Read more

Canary Call

A 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 the bond is outstanding. Read more

Cancel Former Order

Cancel 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 of Company XYZ at $15 per share and decides he wants to buy the shares at the current market price of $17 per share, he must submit a cancel former order for the pending instructions and replace it with a new order to buy at the market price. Read more

Canceled Check

A canceled check is a check that has cleared or prevented from clearing. Let's say John Doe writes a $100 check to Jane Smith. Read more

Canceled Order

In 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. Read more


In 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 insurance policy and/or the insurance policy is no longer effective. Read more

Cancellation Bulletin

A 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 list" or "restricted card list. Read more

Cancellation of Debt

Cancellation 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. Read more


Candlestick 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 lower shadow, and the real body. Read more


Capital is anything a business uses to generate income. In simple terms, capital is the potential for any item to create wealth. Read more

Capital Account

A capital account is a national account that shows the changes in a nation's assets. These assets can be physical or financial. Read more

Capital Accumulation

Capital 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 over time. Read more

Capital Appreciation

Capital 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. Read more

Capital Asset

For 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 refers to anything the individual owns for personal or investment purposes. Read more

Capital Asset Pricing Model (CAPM)

The 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 inherent risk level of the asset. Read more

Capital Budgeting

Capital 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 more

Capital Decay

Capital 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. Read more

Capital Dividend Account (CDA)

A 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. Read more

Capital Expenditures

Capital 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 life of more than one year. Read more

Capital Flight

Capital 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 government is overthrown. Read more

Capital Gain

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. Read more

Capital Gains Distribution

Capital 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 in net capital gains (that is, capital gains after subtracting capital losses). Read more

Capital Gains Tax

A 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. Read more

Capital Gains Treatment

Capital 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 $1 per share. Read more

Capital Improvement

In 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 Elementary School. Read more

Capital Injection

A 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. Read more

Capital Intensive

Capital 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 considered capital-intensive businesses because they require large amounts of expensive equipment and raw materials to make their products. Read more

Capital IQ

Capital IQ is a research division of Standard & Poor's. Essentially, Capital IQ provides research and analysis on companies. Read more

Capital Loss

A 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. Read more

Capital Markets

The 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. Read more

Capital Stock

Capital 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 location, profit/nonprofit status, board composition, and ownership structure. Read more

Capital Structure

Capital 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 therefore say that Company XYZ's capital structure includes debt and equity. Read more


Capitalism 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, dictates production levels and prices. Read more


In the business world, capitalization has two meanings. The first meaning, also called market capitalization, refers to the value of a company's outstanding shares. Read more

Capitalization Rate

In 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 – Variable Costs)/Property Value Let's say Jane Doe buys a house to rent out for extra income. Read more


Capitalizing 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 capitalize the cost of asset purchases in order to spread out the cost of the assets over many reporting periods. Read more

Capitated Contract

A 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. Read more


Capitulation 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 investors may attempt to liquidate most or all of their holdings in these circumstances. Read more

Car Allowance Rebate System (CARS)

The Car Allowance Rebate System (CARS), also known as "cash for clunkers," was a U. S. Read more

Car Title Loan

A 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 of interest. Read more

Carding Forum

Designed 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 information as well as how to use the illicit information effectively. A card holder's complete profile, called “fullz” in slang, provides the criminal with all the information they would need to impersonate the legitimate cardholder online or in person. Read more


A 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 spring from oligopolistic industries, where a few companies or countries generate the entire supply of a product. Read more

Case-Shiller Home Price Index

The 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" indices to track changes in a variety of markets. Read more


Cash 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 accounts and money market funds. Read more

Cash Accounting

Under 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 XYZ sold 1,000 widgets in December for $1,000 each and that its customers usually take 60 days to pay for their widgets. Read more

Cash Advance

A 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. Read more

Cash and Cash Equivalents (CCE)

Cash 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 time, and the cash flow statement explains the change in cash and cash equivalents over time. Read more

Cash Budget

Cash 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. Read more

Cash Cow

A 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) long after the cost of the investment has been recouped. Read more

Cash Dividend

A 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. Read more

Cash Equivalents

Cash 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 and Treasury bills. Read more

Cash Flow

Cash flow is simply the cash expected to be generated by an investment, asset, or business.   As an investor, you buy a dividend-paying stock. Read more

Cash Flow After Taxes (CFAT)

Cash 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 + Amortization Sometimes analysts also add back other non-cash items and proceeds from debt or equity issuance. Read more

Cash Flow from Financing Activities

The 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, dividend payments, and any repurchase of existing stock. The cash flow from financing activities section expresses the total net cash flow from the total of any of the financing activities described above. Read more

Cash Flow from Investing Activities

Cash 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 breaks out a company's cash sources and uses for the period into three categories: cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities. Read more

Cash Flow from Operating Activities (CFO)

Cash flow from operating activities (CFO) measures the cash-generating abilities of a company's core operations (instead of its ability to raise capital or buy assets).   More simply, cash flow from operations is the money a company earns from its day-to-day business operations, whether from selling goods or providing services. Read more

Cash Flow Loan

A 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 in 30 to 180 days. Read more

Cash Flow Per Share

Cash 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 reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term. Read more

Cash Flow Plans

Cash 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 payment of insurance premiums with cash flow. Read more

Cash Flow Return on Investment

The 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. Read more

Cash Flow Statement

A cash flow statement (also referred to as the statement of cash flows) is a document that reports the inflows and outflows of cash within a business. It is one of three main financial statements that businesses use alongside the balance sheet and income statement. Read more

Cash Flow to Capital Expenditures

Cash 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 improve or maintain business operations. It is an important measure used by analysts to determine a company's ability to fund operations. Read more

Cash Flow Underwriting

In 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 auto insurance policies. Read more

Cash Market

A 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. Read more

Cash Out Refinance

A 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 a home equity loan or HELOC. A cash out refinance offers a low-interest way to borrow money for anything, including to pay off credit card debt, make home improvements, go to college, or buy a car. Read more

Cash Price

Also 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 restaurant, you pay the cash price -- the price of the good for immediate delivery. Read more

Cash Settlement

A 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 underlying security or commodity that may be purchased or sold upon exercise (determined by a price) or expiration (determined by a date). Read more

Cash-Flow Matching

Cash-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 portfolio. Read more


Cash 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 program to encourage the cardholder to use their card more frequently. Read more

Cashier's Check

A 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 deposit funds equal to the check amount with the issuing bank. Read more


A 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. Read more

Catastrophe Call

Catastrophe 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 it doesn't have the money to fund the construction. Read more

Category Killer

A 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 more

Caveat Emptor

Caveat 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. Read more

CD Ladder

A 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. For example, say you have $75,000 to invest. Read more

Central Bank

A 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 to maintain a stable currency, control inflation and maximize employment through the promotion of reasonable economic growth. Read more

Certificate of Deposit (CD)

A 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 investor has deposited a sum of money for specified period of time and at a specified rate of interest. Read more

Certificate of Deposit Account Registry Service (CDARS)

A 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 network of multiple banks in order to access FDIC insurance beyond the $250,000 single-institution limit. When investors are looking to make a CD purchase that exceeds the limit, the bank they are using will employ the CDARS system in order to locate multiple CDs that can accommodate the customer’s needs. Read more

Certificate of Insurance (COI)

A 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 coverage, and ownership. Read more

Certified Check

A 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. Read more

Certified Financial Planner (CFP)

Certified 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 Board.   The CFP is a respected designation that denotes a person is a competent, professional and ethical financial planner. Read more

Certified Kingdom Advisor (CKA)

Relatively 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 based approach to their financial lives. CKA holders integrate their financial advisory practice with a faith-based approach to planning and investing. Read more

Certified Public Accountant (CPA)

The 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 Uniform CPA Examination and meet additional education, experience, and state licensing requirements that allow them to provide accounting services to the public. Read more

CFA Exam

The 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 Institute to financial and investment professionals. Read more

CFA Institute

The CFA Institute issues the CFA designation. CFA stands for Chartered Financial Analyst. Read more

Chapter 10

Chapter 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 part of the Bankruptcy Act of 1898 and the subsequent Chandler Act of 1938. Read more

Chapter 11

Chapter 11 bankruptcy refers to the section of U. S. Read more

Chapter 13

Chapter 13 refers to the section of U. S. Read more

Chapter 7

Chapter 7 refers to the section of U. S. Read more

Chapter X

Chapter 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. Read more

Charge Card

A 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 the same as a credit card. Read more


A 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 card charge, the account will be credited for the disputed amount via a chargeback. Read more

Chartered Financial Analyst (CFA)

A 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 so difficult to achieve, the CFA designation is considered to be the most respected among investment management professionals around the world. Read more

Chartered Investment Counselor (CIC)

A 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 advisors. Read more

Chartered Market Technician (CMT)

A 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) designation to candidates who have shown proficiency in technical market analysis as demonstrated in a series of three professional examinations. Read more

Chartered Trust and Estate Planner (CTEP)

The 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 trusts and estate planning. In order to be considered for CTEP certification, you must have the following prerequisites: Minimum three years experience with trusts and estate planning, Completion of graduate or undergraduate studies in finance, tax, accounting, and law or Obtain a CPA, MBA or MS from an accredited university If the higher education prerequisites are not met, the candidate will be required to complete five courses designated by the AAFM in addition to passing a comprehensive examination and completing 15 hours of continuing education each year. Read more

Checkable Deposits

Checkable 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 accounts, and money market accounts. Read more

Chicago Board of Trade (CBOT)

The 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 each year. Read more

Chicago Board Options Exchange (CBOE)

The 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 options. Originally created in 1973 as an extension of the Chicago Board of Trade (CBOT), the Chicago Board Options Exchange (CBOE) became the first exchange to offer standardized options trading. Read more

Chicago Mercantile Exchange (CME)

The 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 trades each year. Read more

Chief Executive Officer (CEO)

The 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 strategies that maximize shareholder value. Read more

Chief Financial Officer (CFO)

The 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 shareholder value. Read more

Chief Operating Officer (COO)

The 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 leadership of the company, the COO is responsible for the day-to-day execution. Read more

Child Tax Credit

The 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 fixed amount for each qualifying child. Read more

Christmas Club

Banks 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. Read more

Class A Shares

Class 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 purchases stock in Company XYZ. Read more

Class Action

Class 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 often shareholders, customers or employees. Read more

Class B Shares

Class 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. Read more

Clean Up Call

A 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 generate enough cash to make the principal and interest payments on the CMOs. Let's say Company XYZ has issued $500 million of CMOs that have principal and interest payments of $2 million per month. Read more


A clearinghouse is an intermediary between buyers and sellers of financial instruments. Clearinghouses take the opposite position of each side of a trade. Read more

Closed End Lease

A 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 a 2021 Ford Mustang. Read more

Closed-End Fund (CEF)

A 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 initial public offering. Read more

Closing Bell

The 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. Read more

Closing Costs

Closing 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. Read more

Closing Price

A 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. Read more

Closing Quote

A 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 more

CNN Effect

The 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 breaking events at home and abroad. Read more

Co-Sale Rights

Also 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 is a start-up firm looking for capital. Read more

Cockroach Theory

Cockroach 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 popularly-held belief that the discovery of one cockroach is likely to indicate the presence of others, cockroach theory is the unofficial name for the widely-accepted notion that one piece of bad news about a company will tease out news of similar circumstances surrounding other companies in the respective industry. Read more


Coinsurance, 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 coinsurance specifies a minimum percentage of the property’s assessed cash or replacement value that it must be insured for (perhaps 80%). Read more

Coinsurance Clause

A 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 the insured property owner does not maintain that level of insurance on the property and there is a claim, the insured may be asked to pay a portion of the claim. Read more


A 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 option while simultaneously selling an out-of-the-money call option. Read more


Collateral 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. Read more


Collateralization 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. Read more

Collateralized Bond Obligation (CBO)

A 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. Read more

Collateralized Debt Obligation (CDO)

A 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 called collateralized because the assets being packaged -- mortgages, corporate debt, auto loans or credit card debt- - serve as collateral for investors. Read more

Collateralized Mortgage Obligation (CMO)

A 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 risk classes, called tranches that vary in degree based on the maturity structure of the mortgages. Read more

College Work Study Program (CWSP)

The 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 on-campus) and is paid by the school not to exceed a determined amount. Read more

Collision Insurance

Collision 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 the damage occurred as a result of a collision with another automobile, an object such as a tree or traffic barrier, or an accident involving just the covered automobile such as a rollover. Read more


Collusion, 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 are four major cable providers in the U. Read more

Combination Trade

A 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 section we will look at a very popular trade called a long straddle. Read more

Command Economy

A 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. Command economies are characterized by centralized control, forecasting, and pricing. Read more


Commerce 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 market, selling goods in a store, drilling for oil, etc. Read more

Commercial Bank

A 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. Commercial banks are owned by shareholders and are run for a profit, which is largely obtained by lending at rates higher than they pay their depositors. Read more

Commercial Mortgage-Backed Security (CMBS)

A 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 commercial mortgages of varying terms and values, such as multi-family dwellings, commercial real estate, etc. Read more

Commercial Paper

Commercial 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 this type of funding. Read more

Commercial Real Estate

Commercial 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. Read more


A 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. Read more


Commodification, 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 conditions: 1) it must be standardized and, for agricultural and industrial commodities, in a "raw" state; 2) it must be usable upon delivery; and 3) its price must vary enough to justify creating a market for it. Read more


A commodity is a raw material that is interchangeable with other materials of the same type. Investors can participate in the commodities market on the NYMEX.

Read more

Commodity Futures Trading Commission (CFTC)

The 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 Commodity Futures Trading Commission was established by a government mandate in 1974 to enforce rules stated in the Commodities Exchange Act. Read more

Commodity Index

A 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. The Goldman Sachs Commodity Index (GSCI) is one of the most popular commodities indexes. Read more

Commodity Market

A 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 commodities, but foreign currencies, emissions credits, bandwidth, and certain financial instruments are also part of today's commodity markets. Read more

Commodity Parity Price

Commodity 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 its current price may be compared in order to gauge its purchasing power for producers. Read more

Commodity Research Bureau Index (CRB)

The 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. Read more

Common Stock

Common 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, the shareholder gets one vote for every share he or she owns, though that is not always the case) such as whether the company should acquire another company, who the board members should be and other big decisions. Read more

Common-Size Balance Sheet

A 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: The right-most column on this balance sheet, which shows each line item as a percentage of assets, is a common-size balance sheet. Read more

Common-Size Financial Statement

A 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 Company XYZ's income statement looks like this: The right side of the income statement, which shows each expense as a percentage of sales, is a common-size income statement. Read more

Common-Size Income Statement

A 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 this: The right side of the income statement, which shows each expense as a percentage of sales, is a common-size income statement. Read more

Comparative Advantage

A 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" in the early 1800s. Read more


A 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-weighted average of the 65 companies that compose the Dow Jones Industrial Average, the Dow Jones Transportation Average, and the Dow Jones Utility Average. Read more

Composite Index

A 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 Average (DJIA), the Dow Jones Transportation Average (DJTA) and the Dow Jones Utility Average (DJUA). Read more


In 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. Read more

Compound Interest

The 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. Read more

Compound Option

A 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. Read more


Compounding 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 account at XYZ Bank on January 1. Read more


A 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 pools, controlled by the condominium management. Read more


A 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 diversify risk by participating in unrelated businesses or to expand a business within an industry to include suppliers and product purchasers. Read more

Consensus Estimate

A 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 cover. Read more


A 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 physically or mentally incapacitated, or be a minor. Read more


In consignment, an arrangement is made between owners and third parties (consignees), where consignees agree to sell the owners’ goods for a commission. Most typically, these commissions are a flat fee or a percentage of the sale. Read more


In 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 company that owns four other companies: Company A, Company B, Company C and Company D. Read more

Consolidated Financial Statements

A consolidated financial statement is the combined financial statements of a parent company and all of its subsidiaries, divisions, and/or sub-organizations. Consolidated financial statements provide a comprehensive overview of a company's financial operations for the entire group of entities. Read more

Consolidated Reports of Condition

Consolidated Reports of Condition are reports that are filed quarterly by banks and all regulated financial institutions with the Federal Financial Institutions Examination Council (FFIEC). Consolidated Reports of Condition are commonly referred to as a call report. Read more


In 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 most obvious examples of industry consolidation can be seen in the evolution of public accounting over the twenty years. Read more

Constant-Price GDP

Also 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 activity. Read more

Construction Loan

Sometimes 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 the homebuyer, builder, or developer on a short-term basis to cover the total cost of the construction. Read more

Consumer Confidence Index (CCI)

The 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 CCI is not the same as the Consumer Sentiment Index published by the University of Michigan. Read more

Consumer Cyclical

Consumer 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 or shrinks. Read more

Consumer Durables

Consumer durables are a category of consumer products that don't have to be purchased frequently because they last for an extended period of time. Consumer goods are divided into two categories: durable goods and non-durable goods. Read more

Consumer Financial Protection Bureau (CFPB)

Created 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 financial services companies in the credit card and mortgage industry as well as other financial services products, the CFPB guides policy and enforcement in order to protect consumers from fraud and abuse. Read more

Consumer Price Index (CPI)

The consumer price index (CPI) measures changes in consumer prices. The Bureau of Labor Statistics (BLS) calculates and publishes CPI data monthly. Read more

Consumer Staples

Consumer 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 staples include food, drugs, beverages, tobacco, and basic household products. Read more

Contactless Payment

Contactless 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 or Near Field Communication (NFC) standards. Read more


Contango 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 price of an asset (its price right now) and the expected spot price on the date when a derivative contract expires. Read more

Contingent Deferred Sales Charge

Also 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 or a redemption charge. Read more

Continuous Auction Method

Also 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 by matching them with other orders according to the order price and age. Read more


A 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 market or "crowd" tends to overreact to information in the short-term, which causes price increases and decreases to be overdone and allows savvy investors to profit. Read more

Contribution Margin

Contribution 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 contribution is the difference between the market price of the product and its variable cost, where variable cost is the production cost excluding the company’s own fixed costs of operating the business. Read more

Conventional Loan

A 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. Read more

Conversion Ratio

A 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 common stock at a set price after a certain date. Read more

Convertible Bond

A 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 value that is convertible into Company XYZ common stock. Read more

Convertible Preferred Stock

Convertible 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 preferred stock on June 1, 2006. Read more


In 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 rates change is called duration, which often is represented visually by a yield curve. Read more

Core Earnings

Core 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 measure the income a company generates from its daily operations. Read more

Cornering the Market

"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 profit from cornering the market on Company XYZ. Read more

Corporate Bond

Learn more about corporate bonds and how they differ from purchasing stock in a company.

Read more

Corporate Charter

Also 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, profit/nonprofit status, board composition and ownership structure. A corporate charter is not the same as bylaws, which set forth the rules for the company's day-to-day operations. Read more

Corporate Governance

Corporate 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 maintaining a company's corporate governance. Read more

Corporate Inversion

Corporate inversion is practice by U. S. Read more

Corporate Profit

Corporate 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 the bottom line, net profit or net earnings. Read more

Corporate Social Responsibility (CSR)

Learn how corporate social responsibility benefits companies and communities alike. 

Read more


A 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 more


A 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. Read more


Correlation, 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 analysts use correlation to estimate the effectiveness of diversification to decrease risk and optimize portfolio performance in different market conditions. Read more

Cost Basis

Cost basis refers to the original price of an asset. Cost basis is sometimes called tax basis. Read more

Cost Benefit Analysis

Cost-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 analysis is an important part of the decision-making process. Read more

Cost of Capital

Cost of capital can best be described as the ability to cover both asset and liability expenditures while generating a profit.   A simpler cost of capital definition: Companies can use this rate of return to decide whether to move forward with a project. Read more

Cost of Equity

Cost of equity is the rate of return required on an equity investment by an investor.

Read more

Cost of Goods Sold (COGS)

Cost 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. Read more

Cost Per Thousand (CPM)

Cost 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. Read more

Cost Per Unit

Cost 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 retail outlets. Read more

Cottage Industry

Cottage 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 factories. A cottage industry describes the methodology used to produce most goods common throughout much of human history up until the Industrial Revolution. Read more

Countercyclical Stock

A 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 higher. Read more

Country Risk

Country 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 and economic unrest affect the securities of issuers doing business in a particular country. Read more

Coupon Bond

A 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 more

Coupon Equivalent Rate (CER)

The 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 equivalent rate, use the following formula: (Spread between current price and face value / current price) x (365 / time to maturity)   note that some versions of the formula use a 365-day year while others use 360-day year. Read more

Coupon Equivalent Yield (CEY)

The 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 more

Coupon Rate

In the finance world, the coupon rate is the annual interest paid on the face value of a bond. It is expressed as a percentage. Read more


A 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. Read more

Coverage Ratio

A 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 ratio, debt service coverage ratio, times interest earned (TIE), and the interest coverage ratio. Read more

Covered Call

A 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. Read more


Credit 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. Read more

Credit Bureau

A 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 businesses. Read more

Credit Card

A 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. Read more

Credit CARD Act

The 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 that were considered unfair or even deceptive to consumers. Read more

Credit Card Balance

A credit card balance is the total amount of money owed on a credit card account. Whenever a purchase is made, the balance increases. Read more

Credit Crunch

A 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. Read more

Credit Default Swap (CDS)

A 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 swap (CDS), two counterparties exchange the risk of default associated with a loan (e. Read more

Credit Derivative

A 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 to a third party. Read more

Credit Limit

A 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 card or another type of revolving credit, the lender will decide on the maximum amount of credit it's willing to extend to that person; this maximum amount is known as the credit limit. Read more

Credit Quality

Credit 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 measure of an individual's credit quality. Read more

Credit Rating

In 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. Read more

Credit Report

A 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, Experian and Equifax. Read more

Credit Risk

Credit 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. Read more

Credit Score

Credit 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 information on a person's credit report. Read more

Credit Spread

A 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 difference in the risk of two bonds with otherwise similar characteristics. Read more

Credit Union

A 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 financial services to each other. Read more

Credit Utilization Rate

The 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 more

Credit Utilization Ratio

Credit 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 credit utilization ratio is also referred to as the utilization ratio. Read more


A 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. Read more

Critical Mass

Critical 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 and efficiency. Read more


Cross-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 its shares on the Toronto Stock Exchange. Read more

Crowding Out Effect

The 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 obtain loans. The theory behind the crowding out effect assumes that governmental borrowing uses up a larger and larger proportion of the total supply of savings available for investment. Read more

Cumulative Dividend

A 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 cumulative dividend is referred to as "straight preferred. Read more


Currency is a medium of exchange for goods or services within an economy. Currency can be either fiat or tied to an underlying asset. Read more

Currency Risk

Currency 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 foreign currency. Currency risk may be the single biggest risk for holders of bonds that make interest and principal payments in a foreign currency. Read more

Current Assets

Current 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 sale, consumption, utilization, and exhaustion through standard operations. Read more

Current Liability

A current liability is a liability due in less than one year. A liability is a claim on a company's assets. Read more

Current Portion of Long-Term Debt (CPLTD)

The 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 borrows $10,000,000 from Bank ABC. Read more

Current Ratio

The current ratio is a commonly-used financial ratio. It tells investors and analysts whether a company is able to pay its current liabilities with its current assets (typically within a 12-month period). Read more

Current Yield

Current 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 payment / Current Bond Price For example, let's assume a particular bond is trading at par, or 100 cents on the dollar, and that it pays a coupon rate of 3%. Read more


CUSIP 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 and Canada. The American Bankers Association initially developed the CUSIP system in 1967. Read more


A 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 of activities, including physically holding equities and bonds, settling purchases and sales, reporting the status of assets, tax compliance and reporting, and management of the client's accounts and transactions. Read more

Cyclical Industry

A cyclical industry is an industry whose performance (revenues, profits, etc. ) is tied to the business cycle. Read more

Cyclical Stock

Cyclical 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 fluctuations. Read more

Cyclical Unemployment

Cyclical 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. Read more