Moneyterms: C

Cable: The sterling/dollar exchange rate. Usually quoted in terms of dollars a pound.…
CAGR: The average growth rate over a period of several years: the geometric average of annual growth rates.…
Call auction: Trading securities in batches: orders are collected, a price fixed that maximises the volume traded, and whatever orders can trade at that price execute.…
Call option: An option that gives the holder the right to buy a security.…
Cannibalisation: Increasing one revenue stream at the at the cost of losing these revenues from elsewhere: what happens if new products or outlets compete with older ones.…
Capex: An abbreviation of capital expenditure. The amount spent on buying fixed assets, other than as a part of an acquisition.…
Capital adequacy: The ratio of a bank's capital to its assets. Regulators set minimum levels to protect both depositors and the economy.…
Capital asset pricing model: A method of valuing securities or an investment using a discounted cash flow (DCF) using a risk adjusted discount rate.…
Capital expenditure: Amount spent on buying fixed assets, other than as a part of an acquisition.…
Capital gains: Gains made by increases in the value of an investment, as opposed to the income it generates.…
Capital intensive: Requiring high capital investment relative to the size of the business. Such businesses will tend to face high depreciation charges and operational gearing.…
Capitalisation: The addition to the balance sheet as an asset of an amount that could otherwise have been treated as an expense.…
Capitalisation issue: The issue of new shares to existing shareholders at no charge in proportion to their existing shareholdings. It is basically a bookkeeping exercise.…
Capital markets: Markets in financial assets such as shares and debt, where long term funding can be raised.…
Capital reduction: A reduction of shareholders capital or other non-distributable reserves.…
Capital reorganisation: A change to a company's capital structure.…
Capital structure: The particular combination of debt, equity (shares) and other sources used by a company to finance its long term requirement for capital.…
Capital structure irrelevance: The theory that a company's capital structure does not affect its total (equity + debt) value.…
CAPM: A method of valuing securities or investments: a discounted cash flow (DCF) using on a risk adjusted discount rate.…
Carried interest: Carried interest is a bonus paid to fund managers, usually in private equity. It is a proportion of returns above a hurdle rate.…
Carrier pre-select: A regulator imposed system that allows customers of an incumbent telecoms network to choose to route all their calls through another network.…
Carry trade: A forex trade that exploits differences in interest rates.…
Cartel: A group of firms acting together to restrict prices. Most commonly, a group of producers agree not to sell below a given price to give themselves monopoly pricing power.…
Cash conversion: The cash conversion rate measures the proportion of profits that are converted to actual cash flow: cashflow ÷ profits.…
Cash cost: The cost of a unit of a mines output, including all cash operational costs at site level.…
Cash cycle: The length of time it takes to get from paying cash for stock (inventory) to getting cash after selling it: stock days + debtor days - creditor days.…
Cash flow: The amount of cash a company actually receives or pays. There are several measures in common use.…
Cash flow per share: The cash flow generated per share: cash flow ÷number of shares in issue.…
Cashflow statement: A statement which shows the movement of cash (i.e. spent and received) during a given period.…
Cash interest cover: Operating cash flow ÷ interest paid. A measure of a company's ability to meet interest payments.…
Cash return on invested capital: A measure of cash returns (as opposed to accounting profit) relative to total capital investment (as opposed to accounting assets) made in a business.…
Cash shell: A company with some assets or cash, but whose main value nonetheless lies in its listing.…
Catastrophe bonds: Securities whose value falls if certain events take place. An alternative to insurance and a way of securitising insurance.…
Cathode metal: Cathode refining is the purification of 99.5% of pure copper by electro-refining to produce 99.99% pure copper cathode.…
CDO squared: A CDO backed by other CDOs.…
Central counterparty: A financial institution that acts as an intermediary between security market participants.…
CER: An abbreviation of constant exchange rates, an adjustment used to strip out the effect of currency fluctuations on sales and profits to give a better indication of underlying trends.…
Ceteris paribus: All things being equal, a term often used in economic modelling.…
CFA: Chartered financial analyst: a qualification for analysts linked to membership of a professional organisation.…
CFD: An abbreviation of contract for difference. An agreement to pay an amount based on the change in some underlying number, not necessarily a security.…
CFI code: An international standard coding system for classifying financial securities.…
Chartist: A user of technical analysis, investing on the basis of share price movements rather than fundamentals.…
Chinese wall: Operational arrangements (rules, physical separation, IT systems) designed to prevent confidential information leaking from one department of a financial institution to another.…
Churn: The number of new subscribers who replacing those who have cancelled the service as a proportion of the total number of subscribers.…
Churning: Trading more often benefits a client, usually in order to inflate commissions.…
Circuit breaker: An automated suspension in trading that typically takes effect when the price of a security moves by more than a pre-set amount.…
City Code on Takeovers and Mergers: The City Code on Takeovers and Mergers; the regulations that control takeover bids in the UK.…
Claims equalisation reserve: A balance sheet item sometimes used by insurance companies who are smoothing revenues.…
Claims ratio: Claims payable as a percentage of premium income. The equivalent of gross profit margin for an insurance business.…
Clean price: The clean price of a bond is the dirty price less the accrued interest.…
Clearing house: A provider of settlement services that deals with the transfers of ownership necessary after a securities trade takes place.…
Clearing & settlement: The processes that take place after a trade to arrange and carry our payment and transfers of ownership.…
Clinical trials: The testing new of drugs and vaccines by administering them to people in order to demonstrate their safety and effectiveness to regulators. A key part of the approval process.…
Close period: The period prior to the release of results during which directors and other insiders are not allowed to trade in a company's shares.…
Closet tracker: A fund that is not officially a tracker fund, but which is nonetheless run like one.…
Cockroach Theory: The idea that one piece of bad news is likely to be followed by further bad news.…
Collateralised bond obligation: A debt instrument backed by debt, usually created by securitising assets of a financial institution.…
Collateralised debt obligation: A debt instrument backed by debt, usually created by securitising assets of a financial institution.…
Collateralised loan obligation: A debt instrument backed by debt, usually created by securitising assets of a financial institution.…
Collective investment vehicle: Any entity that allows investors to pool their money rather than buying securities directly.…
Combined ratio: In general insurance, claims and operating expenses as a percentage of premium income.…
Commercial paper: Unsecured short term corporate debt.…
Commoditisation: What happens when a product loses its differentiation; when buyers care less what supplier, model or brand they buy.…
Commodity: An undifferentiated product; one that can be bought in identical form from many suppliers giving no supplier a chance to sell at margins that would generate above normal returns.…
Company secretary: The officer of a company responsible for ensuring that a company fulfils certain legal responsibilities.…
Complementary goods: Goods which are used together, so a reduction in the price of one leads to an increase in demand for the other.…
Compliance: Anything to do with following laws, regulations, standards or internal procedures.…
Compound Annual Growth Rate: The average growth rate over a period of several years: the geometric average of annual growth rates.…
Compound interest: The effect of interest on interest. Assuming interest is re-invested total returns include interest on that interest.…
Compulsory acquisition: The acquisition of shares from unwilling sellers, usually the last stage of a takeover bid.…
Concentrate: Partially purified ore; an intermediate product which is further refined to produce metal.…
Concert party: A group of people acting in concert to make a takeover bid.…
Confirmation bias: The tendency to favour evidence which supports a particular conclusion. Hard to avoid, especially in financial modelling.…
Conglomerate: A company that has many different unrelated businesses.…
Conglomerate discount: The difference between what the businesses within a comglomerate would be worth seperately, and the lower price at which conglomerate trades.…
Consolidated accounts: Financial statements prepared for a group as a whole.…
Consolidation: The reduction in the number of shares a company has, giving each shareholder fewer, but more valuable shares.…
Constant currencies: An adjustment used to strip out the effect of currency fluctuations on sales and profit.…
Constant exchange rates: An adjustment to strip out the effects of exchange rate fluctuations when comparing sales or profits with previous periods.…
Constructive liabilities: Constructive liabilities arise from expectations created that obligations will be fulfilled.…
Contango: The price of a futures contract being greater than the spot price of the underlying (usually a commodity).…
Contingent convertible bonds: Contingent convertible bonds (CoCo bonds) covert if a specified event occurs.…
Contingent liabilities: Contingent liabilities are possible future liabilities which will become certain on the occurrence or non-occurrence of a future event.…
Continuing operations: A number (generally turnover and profits) which excludes the effects of disposals but not those of acquisitions.…
Continuous time: Financial models which treat time as changing continuously rather than in jumps, as opposed to discrete time models.…
Contract for difference: An agreement to pay an amount linked to the change in some underlying number, not necessarily a security.…
Contrarian Investing: A strategy of consistently going against the current views of the market.…
Contribution: sales price - variable cost per unit.…
Contribution margin: A per unit measure of profit margin: contribution ÷unit price, or total contribution ÷revenue.…
Control premium: the amount by which the market price of shares is exceeded by the price paid to buy enough shares to take control of a company.…
Conversion ratio: The number of units of the underlying security that are exchangeable for one unit of the derivative.…
Convertible arbitrage: A strategy that aims to exploit inconsistencies between the price of a convertible and the equity it can be converted into.…
Convertible bonds: Bonds which can be exchanged for shares on or before maturity.…
Core and satellite: An investment strategy that combines large conservatively run core portfolio, with a smaller, higher risk , satellite holdings.…
Core business: A company's main business; the business that it has real expertise in and can focus on.…
Corporate actions: A company does that has an impact shareholder's holdings.…
Corporate governance: The systems used to control corporations, and in particular deal with conflicts of interest between shareholders and managers (agency problems).…
Corporate social responsibility (CSR): The responsibility corporations have to wider society.…
Correction: A fall in a financial market, that is comparatively small, and which does not have more than a brief effect on the behaviour of the market.…
Correlation coefficient: A mathematical measure of how much one number (such as a share price) is influenced by changes in another (such as an index).…
Cost/assets ratio: For banks; operating expenses ÷ average assets over the period.…
Cost/income ratio: Most often used for banks: operating expenses ÷ operating income.…
Cost of capital: The return required to compensate providers of capital for risk and the time value of money.…
Cost of sales: The accrued cost of the goods (or services) supplied in a period; the difference between sales and gross profit.…
Cost-plus: Cost-plus prices and contract payments are a fixed or percentage mark-up on the supplier's costs.…
Counter-cyclical: Counter-cyclical business and invetments do well when the economy and markets do badly.…
Counterparty: A person with whom a transaction is made.…
Counterparty risk: The risk that a counterparty will fail to fulfil its obligations.…
Coupon: A coupon is a single interest payment on a interest paying security such as a bond.…
Covariance: A measure of the strength of the relationship between two numbers.…
Covered: A synonym for hedged, but usually only used in certain contexts.…
Covered interest arbitrage: An arbitrage strategy that exploits inconsistencies between currency depreciation and differences in interest rates.…
Covered interest rate parity: The interest rate parity relationship that can be derived from assuming no covered interest arbitrage.…
Covered warrants: Derivatives very similar to options, giving the holder the right to buy or sell underlying securities at a fixed price; not the same as company issued share warrants.…
Cov-lite: Corporate debt that is raised without the usual debt covenants.…
CPI: The consumer price index. The UK measure is another name for the EU's HICP.…
Crash: A downward movement in the market that has lasting effects, particularly on sentiment.…
Creative accounting: Manipulation of financial numbers, usually within the letter of accounting rules.…
Credit default swap: A credit derivative that transfers default risk.…
Credit multiplier: The multiple of the increase in the monetary base by which the money supply increases.…
Creditor days: How long, on average a company takes to pay its creditors: ((trade creditors ÷annual purchases) ×365.…
Credit rating: Ratings of the riskiness of debt and the credit-worthiness of corporate and sovereign borrowers. They are issued by a small number of agencies.…
Credit risk: The risk that the cash flows due from a debt instrument will not be paid, or will be paid late.…
CRM: The way in which a company manages its relationships with customers. Often used to describe software used for such purposes.…
CROIC: A measure of cash returns (as opposed to accounting profit) relative to total capital investment (as opposed to accounting assets) made in a business.…
Cross elasticity: Change in demand or supply of one good as a result of a change in something related to another product.…
Cross licensing: Exchange rights to patent portfolios, which reduces litigation and R & D costs, while simultaneously erecting barriers to entry.…
Cross selling: The sale of a product to customers who already purchase a different product from the supplier.…
Crude oil: A mixture of liquid hydrocarbons. Prices vary with grade and density.…
CSR: Corporate social responsibility: the responsibility corporations have to wider society.…
Cum-dividend: A share is said to be trading cum-dividend when the payment of a dividend is due in the near future and investors who buy the share now will receive the dividend.…
Cum-rights: Shares are said to be trading cum-rights as long as buyers will be entitled to a forthcoming rights issue.…
Cumulative preference shares: Preference shares on which any unpaid dividend is added to what is due in subsequent years.…
Current assets: Those assets which are expected to be used (sold or consumed) within a year (unlike fixed assets) are known as current assets.…
Current assets ratio: Current assets divided by current liabilities.…
Current cost accounting: Drawing up accounts using asset values based on the current replacement cost of assets.…
Current liabilities: Liabilities which are expected to be settled in less than a year are known as current liabilities.…
Custodian: A custodian holds securities on behalf of an institutional investors. This can reduce administrative expenses and can help safeguard assets.…
Cyclical: Cyclical businesses are those that are sensitive to the economic cycle.…
Cyclically adjusted PE ratio: A long term PE used to adjust for the effect of the economic cycle on earnings.…