| Call
Option |
An option contract
that gives the holder of the option the right (but not the obligation)
to purchase, and obligates the writer to sell, a specified number
of shares of the underlying stock at the given strike price, on or
before the expiration date of the contract. (see Put
Option) |
| Callable |
A
bond issue, all or parts of which may be redeemed by the issuing
corporation under specified conditions before maturity. The term
also applies to preferred shares that may be redeemed by the issuing
corporation. |
| Capital
Expenditure |
Amount
used during a particular period to acquire or improve long term assets
such as property, plant, or equipment. |
| Capital
Gain |
Profit
made on securities, either through dividends or by selling the securities
for a higher price than they originally cost. |
| Capital
Gains Distribution |
Payments
to mutual fund shareholders of profits from the sale of securities
in a fund's portfolio. Capital gains distributions (if any) are usually
made annually. |
| Capital
Stock |
All
shares representing ownership of a business, including preferred
C and common. |
| Capitalization |
Total
amount of various securities issued by a corporation. Capitalization
may include bonds, debentures, preferred and common stock, and surplus. |
| Cash
and Equivalents |
The
value of assets that can be converted into cash immediately, as reported
by a company. Usually includes bank accounts and marketable securities,
such as government bonds and Bankers' Acceptances. Cash equivalents
on balance sheets include securities (e.g., notes) that mature within
ninety days. |
| Cash
Dividend |
(see Dividend) |
| Cash
Flow |
Reported
net income of a corporation plus amounts charged for depreciation,
depletion, amortization, extraordinary charges to reserves, which
are bookkeeping deductions and not paid out in actual dollars and
cents. |
| Cash
Sale |
A
transaction on the floor of the Stock Exchange that calls for delivery
of the securities the same day. In "regular way" trades,
the seller is to deliver on the third business day, except for bonds,
which are the next day. |
| Certificate |
The
actual piece of paper that is evidence of ownership of stock in a
corporation. |
| Certificate
of Deposit (CD) |
An
agreement with a bank that you will leave your money on deposit for
a specified period of time in return for a specific amount of interest. |
| CFTC |
The
Commodity Futures Trading Commission, created by Congress in 1974
to regulate exchange trading in futures. |
| Churning |
Excessive
trading of a client's account in order to increase the broker's commissions. |
| Closing
Purchase |
A
transaction in which the purchaser's intention is to reduce or eliminate
a short position
in a stock, or in a given series of options. |
| Closing
Sale |
A
transaction in which the seller's intention is to reduce or eliminate
his long position
in a stock, or a given series of options. |
| Collateral |
Securities
or other property pledged by a borrower to secure repayment of a
loan. |
| Commercial
Paper |
Debt
instruments issued by companies to meet short-term financing needs. |
| Commission |
The
fee paid to a broker to execute a trade, based on number of shares,
bonds, options and/or their dollar value. In 1975, deregulation led
to the creation of discount brokers, who charge lower commissions
than full service brokers. Full service brokers offer advice and
usually have a full staff of analysts who follow specific industries.
Discount brokers simply execute a client's order and usually do not
offer an opinion on a stock. |
| Commission
Broker |
An
agent who executes the public's order for the purchase or sale of
securities or commodities. |
| Commodities |
(see Futures) |
| Common
Stock |
One
of two types of stock an investor may purchase in a company. Most
stock is common stock. Investors who purchase it have voting rights
at the company's annual stockholders' meeting. Common Stockholders
are not guaranteed dividends, buy they may receive higher dividends
during the company's prosperous periods. If a company fails or liquidates,
common stockholders are paid after bondholders and preferred stockholders.
(see Preferred Stock) |
| Competitive
Trader |
A
member of the Exchange who trades in stocks on the Floor for an account
in which the member firm has an interest. Also known as Registered
Trader. (see Registered
Representative) |
| Conglomerate |
A
corporation that has diversified in operations usually by acquiring
enterprises in widely varied industries. |
| Consensus
Rating |
The
average of analysts recommendations for a single entity. As many
brokers have different ratings systems, their recommendations must
be standardized so that a consensus can be calculated. The I/B/E/S
ratings are calculated using a standard set of recommendations, maintained
by I/B/E/S, each with an assigned numeric value:
1.
Strong Buy
2. Buy
3. Hold
4. Underperform
5. Sell
Each
recommendation received from the analysts is mapped to one of
the I/B/E/S standard ratings. Assigning a numeric value to the
broker text enables I/B/E/S to calculate a consensus recommendation.
This consensus recommendation appears as the mean (average) of
the assigned values.
|
| Consolidated
Balance Sheet |
A
balance sheet showing the financial condition of a corporation and
its subsidiaries. |
| Convergance |
The
movement of the price of a futures contract toward the price of the
underlying cash commodity. At the start, the contract price is higher
because of the time value. But as the contract nears expiration,
the futures price and the cash price converge. (see Divergance) |
| Convertible |
A
bond, debenture or preferred share that may be exchanged by the owner
for common stock or another security, usually of the same company,
in accordance with the terms of the issue. |
| Corporate
Bond |
A
bond issued by a corporation. |
| Correspondent |
A
securities firm, bank or other financial organization that regularly
performs services for another in a place or market to which the other
does not have direct access. Securities firms may have correspondents
in foreign countries or on exchanges of which they are not members.
Correspondents are frequently linked by private wires. |
| Coupon
Bond |
Bond with
interest coupons attached. The coupons are clipped as they come due
and presented by the holder for payment of interest. |
| Coupon
Rate |
In bonds,
notes or other fixed income securities, the stated percentage rate
of interest, usually paid twice a year. |
| Covered
Call |
A short call option position
in which the writer owns the number of shares of the underlying stock
represented by the option contracts. Covered calls generally limit
the risk the writer takes because the stock does not have to be bought
at the market price, if the holder of that option decides to exercise
it. |
| Covered
Option |
An
option position that is offset by an equal and opposite position
in the underlying security. (see Options) |
| Covered
Put |
A
put option position in which the option writer
also is short the
corresponding stock or has deposited, in a cash account, cash or
cash equivalents equal to the exercise of the option. This limits
the option writer's risk because money or stock is already set aside.
In the event that the holder of the put option decides to exercise
the option, the writer's risk is more limited than it would be on
an uncovered or naked put option. |
| Cumulative
Preferred |
A
stock having a provision that if one or more dividends are omitted,
the omitted dividends must be paid before dividends may be paid on
the company's common stock. |
| Cumulative
Voting |
A
method of voting for corporate directors that enables the shareholders
to multiply the number of their shares by the number of directorships
being voted on and to cast the total for one director or a selected
group of directors. A 10- shareholder normally casts 10 votes for
each of, say, 12 nominees to the board of directors. One thus has
120 votes. Under the cumulative voting principle, one may do that
or may cast 120 (10x12) votes for only one nominee, 60 for two, 40
for three, or any other distribution one chooses. Cumulative voting
is required under the corporate laws of some states and is permitted
in most others. |
| Current
Assets |
Those
assets of a company that are reasonably expected to be realized in
cash, or sold, or consumed during one year. These include cash, U.S.
Government bonds, receivables and money due usually within one year,
and inventories. |
| Current
Liabilities |
Money
owed and payable by a company, usually within one year. |
| Current
Return |
(see Yield) |
