|Call: An option contract giving you the
right, but not the obligation, to buy shares of
stock at a set price (the strike price) on, or any
time before, a set expiration date.
|Capital Assets: Capital consists of
property, inventory, cash on hand, accounts
receivable, and other items of value owned by a
|Capital Expenditure: Money spent to buy
equipment or other item that will be "written off"
over a period of years (depreciable asset).
|Capital Gain or Loss: The money you
make or lose on an investment. The money a company
makes or loses on the sale of an asset.
|Capital Stock: Stock issued by a
corporation to raise money for the growth and
expansion of a business.
|Capitulation: Surrender, admit defeat,
|Carry Forward: A tax benefit allowing a
company to apply losses realized in a previous
year to future years' revenue in order to reduce
|Cartel: A group of businesses or
countries that agree to work together to affect
the pricing and availability of certain products
that they pro- duce. OPEC is a classic example.
|Cash Account: A brokerage account that
doesn't offer margin. IRA's are always cash
accounts, as well as most brokerage accounts
opened with less than $5,000.
|Cash Management Account: A brokerage
account that pays you interest, also called an
asset management account, that invests your money
in treasuries and government mortgage programs.
Check writing privileges come with these accounts.
|Cash Cow: Business that has had strong
sales, generating revenue consistently. In most
cases, cash cows are based on products with a
strong brand name that generate repeat buying.
|Cash Discount: A discount offered to
buyers who pay their bills within a specified time
period. A prompt payment incentive.
|Cash Flow: The actual cash in and out
of a corporation. Companies can secure paper
profits but go bankrupt because of negative cash
|Certificate of Deposit (CD): A bank
savings account with a set time the funds will
remain with the bank, from 14 days to 7 years.
|Certified Check: A depositor's check
stamped by the bank as "certified" and
guaranteeing payment. A "certified bank check",
issued by the bank itself, is also commonly known
as a certified check.
|Certified Public Accountant (CPA): A
licensed accountant who has a degree in accounting
or business administration and has passed a
rigorous examination covering accounting,
auditing, and tax preparation.
|CEO, Chief Executive Officer: The
number one person who runs the corporation,
usually is also the corporation’s president.
| CFO, Chief Financial Officer: The
head accountant of a corporation.
|CIO, Chief Information Officer: The
head of the data processing and MIS (management
information systems) department of a company.
|Chairman of the Board: The Head of the
Board of Directors of a corporation. May be the
largest shareholder or company’s founder.
|Channel of Distribution: The means of
getting a product into a customer's hands. This
might include retail stores, direct salespeople,
wholesalers, and distributors.
|Churn: Unnecessary and excessive
trading on a customer's brokerage account, thereby
generating fee income for a broker without adding
value to the investments. While this practice is
illegal, it is also difficult to prove.
|Circuit Breaker: A procedure giving the
authority to temporarily halt trading on all U.S.
stock markets for one hour when the Dow Jones
Industrial Average falls 250 points or more within
a trading day. The pause is designed to allow time
for the markets to absorb the news that
precipitated the decline. Should the average fall
another 150 points within the same day, trading
would again be halted, this time for two hours.
|Class Action: A suit filed by one or
more individuals on behalf of a larger group of
people who have been treated similarly by a
situation. Once the suit has been filed and the
court has approved its class action status, all
people who may benefit from a ruling (the parties
to the suit) must be notified.
|Clifford Trust: A trust established for
more than 10 years that allows the transfer of
assets from one individual or organization to
another and then back again when the trust
expires. Before new regulations were established
in 1986, these trusts were a popular means of
transferring income-producing assets to children,
who would be taxed at a lower tax rate. The assets
were typically reclaimed when the child reached
the age of 18.
|Cold Call: A marketing technique that
involves a salesperson placing a telephone call to
a potential client without having had any previous
|Collateral: Property that is pledged as
security for a loan that will be forfeited if
repayment is not made.
|Commission: The amount, usually a
percentage, paid to a broker or salesperson for
selling securities, real estate, or an insurance
|Commercial Paper: Short term loans to
companies, usually of high credit quality.
|Commodities: Goods such as coffee,
grains, gold, pork bellies and orange juice that
are traded on world exchanges, the largest being
the Chicago Mercantile Exchange.
|Common Stock: Shares of stock that
represent ownership of a corporation, with aright
to vote on major corporate affairs. With the hope
that future profits will be distributed to them
and the value of the stock will go up, this is the
usual kind of stock that investors buy.
|Common Carrier: A business that
specializes in providing transport of goods and
|Compounding: When an investment pays
interest on accumulated interest, or earns money
on reinvested gains on your investment.
|Consideration: An item of value given
from one individual or business to another in
return for a promise or agreement to do something
or sell something. In a contract, there must be
consideration for both sides.
|Consolidating: Market pulling back a
little as investors take some money “off the
|Constant Dollar: A measurement tool
used to gauge fluctuations in consumer purchasing
power. The dollar in the base year is valued at
$1, with its value being expressed over future
years relative to the base year.
|Consumer Price Index: The U.S.
Department of Labor's measure of change in the
U.S. cost of living. A survey is conducted monthly
to gauge the cost of various consumer goods, such
as food, housing, and transportation. Costs are
tracked over time to monitor overall living
|Contempt of Court: An act that
interferes with the ability of the court to
conduct normal business, or which insults the
|Contingent Agreement: Agreement between
two parties in which lease, sale, purchase, or
payment depends on a special condition usually
involving a third party.
|Contract: An agreement, signed by two
individuals or businesses, outlining goods or
services to be exchanged, and on what terms.
|Convertible Bonds: Bonds that can be
exchanged for common stock in the same
corporation, based on a preset formula and
|Cooling-off Period: The period after a
company's prospectus has been filed with the
Securities and Exchange Commission and before
offering is made to the public.
|Copyright: The legal right of artists,
authors, and creative individuals to determine who
can use works that they have created.
|Corporate Culture: The values, beliefs,
and ways of doing business that affect the way
employees act, think, and feel about their
|Corporation: A business organized as a
legal entity that issues shares of stock to the
owners. The owners of the shares have no legal
liability if the company goes bankrupt or is sued.
|Cost Basis: An investor's original cost
of a stock or mutual fund, used for tax purposes.
This basis is changed under various circumstances
allowed by the IRS.
|Coupon or Coupon Rate: The annual rate
of interest paid by a bond. A $1,000 bond paying
$50 a year interest has a coupon of 5%.
|Cost per Thousand (CPM): The cost
quoted in advertising to reach one thousand people
using a promotional method. Allows comparison of
various promotional methods by standardizing the
way costs are reported.
|Cover: Buying stock to close-out a
|CPA: See Certified Public Accountant.
|Current Yield: Calculated by taking a
bond's annual dollar interest and dividing it by
the bond's current market price.
|Current Dividend Yield: Calculated by
taking a stock's anticipated annual dollar
dividend and dividing it by the stock's current
market price. Keep in mind that a company may
change the amount of the dividend or even
eliminate it at any time.
|Custodian: An individual or institution
that has the responsibility for overseeing the
financial management of a group of assets.
|Creditor: A person or business that
lends money or is owed money for goods and
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