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 struture irrelevance
The proposition that the proportion of debt to equity does not affect the total value (debt + equity) of a company.…
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.…
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