Alphabetical - C

CableShorthand for dollar/sterling rate
Calendar SpreadA position that is created by taking a long position in a call option that matures at one time and a short position in a similar call option that matures at a different time.
Call Date??
Call MoneyMoney lent by banks to other banks or discount houses which can be recalled at noon each day
Call OptionAn option to buy an asset at a certain price on a certain date some time in the future.
Call Protection??
Call Risk??
Call Schedule??
Callable BondThe issuer has the right to redeem the bond at a specified earlier date than the one orginally fixed as the final maturity.
Callable Credit Products??
Cancelable SwapSwaps that can be cancelled by one side of prespecified dates.
CapAn agreement with a counterparty which sets an upper limit to interest rates for the cap buyer for a stated time period.
Cap RateThe rate determining payoffs in an interest rate cap
Capital AdequacyThe need to maintain adequate capital to cover counterparty risk and position risk
Capital Asset Pricing ModelA model relating the expected return on an asset to its beta.
Capital Growth BondIssue price at par (100%) with redemption at a multiple of that amount.
Capital MarketsThe market for medium and long term securities
Capital RatioThe ratio of a banks primary capital to a weighted value of assets
CapitalisationMarket capitalisation of a company is the number of shares multiplied by the current price
Capitalisation IssueAn issue where funds from a company's reserves are converted into shares and offered free of charge to shareholders.
CapletOne component on an interest rate cap
Cash Flow MappingA procedure for representing an instrument as a portfolio of zero-coupon bonds for the purpose of calculating value at risk.
Cash RatioThe proportion of a bank's liabilities which it considers prudent to keep in the form of cash.
Cash SettlementWhere the product is settled at expiry, based on the differential between the fixed/guaranteed price and the underlying instrument. Procedure for settling a futures contract in cash rather than by delivering the underlying asset.
Cash-Or-Nothing Call OptionAn option that provides a fixed predetermined payoff if the final asset price is above the strike price and zero otherwise.
Cash-Or-Nothing Put OptionAn option that provides a fixed predetermined payoff if the final asset price is below the strike price and zero otherwise.
CAT BondBond where the interest, and possibly, the principal paid are reduced if a particular category of "catastrophic" insurance claims exceed a certain amount.
CDOA security based on a mix of debt and credit risk. Different laters often referred to as tranches (or slices) each having different risk and maturities.
Central Counterparty ModelSet up by the Stock Exchange to remove credit risk when buying and selling.
Certificate of DepositA tradeable deposit issued by banks and building societies.
Certificates of ParticipationA type of municipal bond that are often used to finance capital improvement projects or equipment.
CGTCapital Gains Tax
CHAPSClearing House Automated Payments System - for electronic clearing of payments the same day (UK)
Cheapest-To-Deliver BondThe bond that is cheapest to deliver in the Chicago Board of Trade bond futures contract.
Chinese WallA theoretical barrier between different sections of a firm to avoid fraud (i.e. conflicts of interest or insider dealing). One part of the firm may not pass sensitive information to another if it is against a client's interest.
CHIPSClearing House Interbank Payments - electronic bank clearing in New York
Chooser OptionAn option where the holder has the right to choose whether it is call or a put at some point during its life.
CIRCUSCombined Interest Rate and Currency Swap
Clean PricePrice of a bond not including the accrued interest element. This is the quoted price. The cash price paid for the bond (or dirty price) is calculated by adding the accrued interest to the clean price.
Clearing BankBanks which are part of the clearing system which significantly reduces the number of interbank payments.
Clearing HouseA firm that guarantees the performance of the parties in an exchange-traded derivatives transaction. Central Body guaranteeing contracts in a traded options/futures market. Also known as clearing corporation.
Clearing MarginA margin posted by a member of a clearing house.
CLO??
Closing OutFor futures market - taking the opposite contract for example having previously bought 100 tons of cocoa for June delivery, the buyer now sells 100 tons for the same delivery (or vice-versa)
CMEChicago Mercantile Exchange
CMOCollaterized Mortgage Obligation - A mortgage backed security where investors are divided into classes and there are rules for determining how principal repayments are channeled to the classes.
Collarsee Interest Rate Collar
Collateral??
Collaterised??
CombinationA position involving both calls and puts on the same underlying asset.
Commercial BankingThe classic banking business of taking deposits and lending money, either retail or wholesale
Commerical PaperAn unsecured IOU issued by large companies and banks.
Commission BrokersIndividuals who execute trades for other people and charge a commission for doing so.
Commodity SwapA swap where cash flows depend on the price of a commodity.
Complex Power Duals??
Compound OptionAn option on an option. The holder (buyer) has an option to purchase another option on a pre-set date at a pre-agreed premium.
Compounding FrequencyThis defines how an interest rate is measured.
Compounding SwapSwap where interest compounds instead of being paid.
Concert PartyA group acting together (secretly) in a takeover situation for example three people each buy 2.9% of shares to avoid no longer being able to hide behind nominee status.
ConfirmationContract confirming verbal agreement between two parties to a trade in the over-the-counter market.
ConsolidationReorganising share holdings so that, for example 10 shares at 10p are replaced by a one £1 nominal
Constant Maturity SwapA swap where a swap rate is exchanged for eother a fixed rate or a floating rate on each payment date.
Constant Maturity Treasury SwapA swap where the yield on a Treasury Bond is exchanged for either fixed rate or floating rate on each payment date.
Consumption AssetAn asset held for consumption rather than investment
ContangoA situation where the futures price is above the expected future spot price.
Continuous CompoundingA way of quoting interest rates. It is the limit as the assumed compounding interval is made smaller and smaller.
Contract for DifferenceA derivative product to trade the price differential over an indefinite time period.
Contract SizeThe unit of trading on a derivatives contract.
Control Variate TechniqueA technique that can sometimes be used for improving the accuracy of a numerical procedure.
Convenience YieldA measure of the benefits from ownership of an asset that are not obtained by the holder of a long futures contract on the asset.
Conversion FactorA factor used to determine the number of bonds that must be delivered in the bond futures market.
ConvertibleA convertible bond may be converted later into equity, some other bond or even a commodity
Convertible BondA corporate bond that can be converted into a predetermined amount of the company's equity at certain times during its life.
Convertible Rate FRNAn issue which carries the option to convert either from an initial floating rate note into a fixed rate bond or from a fixed rate bond into a floating rate note.
ConvexityA measure of the curvature in the relationship between bond prices and bond yields.
Convexity AdjustmentAn overworked term. It can refer to the adjustment necessary to convert a futures interest rate to a forward interest rate.
Corporate Bond??
Corporate FinanceThe department of an investment bank dealing with takeovers, mergers and strategic advice to companies
Cost of CarryThe storage costs plus the cost of financing as asset minus the income earned on the asset.
CounterPartyThe opposite side in a financial transaction.
CounterParty RiskThe risk involved if a counterparty fails to settle
CouponInterest payment made on a bond.
Coupon Rate??
Coupon StrippingDetaching the coupons from a bond and selling the coupons and the principal as individual zero coupon bonds
CouponsIssued with bearer bonds to enable the holder to claim the interest.
CoverAn abbreviation of "short cover".
Covered BondIs a bond issued by a financial institution that remains on its balance sheet.
Covered CallA short position in a call option on an asset combined with a long position in the asset.
Covered WarrantA warrant issued by a party other than the originator or issuer of the underlying asset
Covered WritingWhere an option is sold against an existing position.
Credit Default SwapAn instrument that gives the holder the right to dell a bond for its face value in the event of a default by the issuer.
Credit DerivativeA derivative whose payoff depends on the creditworthiness of the one or more entities
Credit Enhancement??
Credit RatingsA measure of the creditworthiness of a bond issue.
Credit RiskThe risk that a loss will be experienced because of the default by the counterparty in a derivatives transaction.
Credit SpreadThe interest rate spread between 2 debt issues of similar duration, maturity etc.
Credit Spread OptionOption whose payoff depends on the spread between the yields earned on two assets.
Credit Valuation AdjustmentThis is the market value of the counterparty credit-risk.
CRESTThe new UK Electronic settlement registering system introduced in July 1996.
CTDCheapest To Deliver bond
Cum DividendMeans the buyer will get the recently announced dividend.
CumulativeApplied to a Preference Share - if dividend is missed it is still owed to the holder.
Currency RiskThe risk of losses resulting from movements in currency exchange rates.
Currency Swap??
Currency Warrants??
Current Yield??
CUSIP??
Custodian??
Cyclical StockThe share prices of these companies move dramatically (up and down) relative to the economy.
Cylinder??
Cable
Shorthand for dollar/sterling rate
Calendar Spread
A position that is created by taking a long position in a call option that matures at one time and a short position in a similar call option that matures at a different time.
Call Date
??
Call Money
Money lent by banks to other banks or discount houses which can be recalled at noon each day
Call Option
An option to buy an asset at a certain price on a certain date some time in the future.
Call Protection
??
Call Risk
??
Call Schedule
??
Callable Bond
The issuer has the right to redeem the bond at a specified earlier date than the one orginally fixed as the final maturity.
Callable Credit Products
??
Cancelable Swap
Swaps that can be cancelled by one side of prespecified dates.
Cap
An agreement with a counterparty which sets an upper limit to interest rates for the cap buyer for a stated time period.
Cap Rate
The rate determining payoffs in an interest rate cap
Capital Adequacy
The need to maintain adequate capital to cover counterparty risk and position risk
Capital Asset Pricing Model
A model relating the expected return on an asset to its beta.
Capital Growth Bond
Issue price at par (100%) with redemption at a multiple of that amount.
Capital Markets
The market for medium and long term securities
Capital Ratio
The ratio of a banks primary capital to a weighted value of assets
Capitalisation
Market capitalisation of a company is the number of shares multiplied by the current price
Capitalisation Issue
An issue where funds from a company's reserves are converted into shares and offered free of charge to shareholders.
Caplet
One component on an interest rate cap
Cash Flow Mapping
A procedure for representing an instrument as a portfolio of zero-coupon bonds for the purpose of calculating value at risk.
Cash Ratio
The proportion of a bank's liabilities which it considers prudent to keep in the form of cash.
Cash Settlement
Where the product is settled at expiry, based on the differential between the fixed/guaranteed price and the underlying instrument. Procedure for settling a futures contract in cash rather than by delivering the underlying asset.
Cash-Or-Nothing Call Option
An option that provides a fixed predetermined payoff if the final asset price is above the strike price and zero otherwise.
Cash-Or-Nothing Put Option
An option that provides a fixed predetermined payoff if the final asset price is below the strike price and zero otherwise.
CAT Bond
Bond where the interest, and possibly, the principal paid are reduced if a particular category of "catastrophic" insurance claims exceed a certain amount.
CDO
A security based on a mix of debt and credit risk. Different laters often referred to as tranches (or slices) each having different risk and maturities.
Central Counterparty Model
Set up by the Stock Exchange to remove credit risk when buying and selling.
Certificate of Deposit
A tradeable deposit issued by banks and building societies.
Certificates of Participation
A type of municipal bond that are often used to finance capital improvement projects or equipment.
CGT
Capital Gains Tax
CHAPS
Clearing House Automated Payments System - for electronic clearing of payments the same day (UK)
Cheapest-To-Deliver Bond
The bond that is cheapest to deliver in the Chicago Board of Trade bond futures contract.
Chinese Wall
A theoretical barrier between different sections of a firm to avoid fraud (i.e. conflicts of interest or insider dealing). One part of the firm may not pass sensitive information to another if it is against a client's interest.
CHIPS
Clearing House Interbank Payments - electronic bank clearing in New York
Chooser Option
An option where the holder has the right to choose whether it is call or a put at some point during its life.
CIRCUS
Combined Interest Rate and Currency Swap
Clean Price
Price of a bond not including the accrued interest element. This is the quoted price. The cash price paid for the bond (or dirty price) is calculated by adding the accrued interest to the clean price.
Clearing Bank
Banks which are part of the clearing system which significantly reduces the number of interbank payments.
Clearing House
A firm that guarantees the performance of the parties in an exchange-traded derivatives transaction. Central Body guaranteeing contracts in a traded options/futures market. Also known as clearing corporation.
Clearing Margin
A margin posted by a member of a clearing house.
CLO
??
Closing Out
For futures market - taking the opposite contract for example having previously bought 100 tons of cocoa for June delivery, the buyer now sells 100 tons for the same delivery (or vice-versa)
CME
Chicago Mercantile Exchange
CMO
Collaterized Mortgage Obligation - A mortgage backed security where investors are divided into classes and there are rules for determining how principal repayments are channeled to the classes.
Collar
see Interest Rate Collar
Collateral
??
Collaterised
??
Combination
A position involving both calls and puts on the same underlying asset.
Commercial Banking
The classic banking business of taking deposits and lending money, either retail or wholesale
Commerical Paper
An unsecured IOU issued by large companies and banks.
Commission Brokers
Individuals who execute trades for other people and charge a commission for doing so.
Commodity Swap
A swap where cash flows depend on the price of a commodity.
Complex Power Duals
??
Compound Option
An option on an option. The holder (buyer) has an option to purchase another option on a pre-set date at a pre-agreed premium.
Compounding Frequency
This defines how an interest rate is measured.
Compounding Swap
Swap where interest compounds instead of being paid.
Concert Party
A group acting together (secretly) in a takeover situation for example three people each buy 2.9% of shares to avoid no longer being able to hide behind nominee status.
Confirmation
Contract confirming verbal agreement between two parties to a trade in the over-the-counter market.
Consolidation
Reorganising share holdings so that, for example 10 shares at 10p are replaced by a one £1 nominal
Constant Maturity Swap
A swap where a swap rate is exchanged for eother a fixed rate or a floating rate on each payment date.
Constant Maturity Treasury Swap
A swap where the yield on a Treasury Bond is exchanged for either fixed rate or floating rate on each payment date.
Consumption Asset
An asset held for consumption rather than investment
Contango
A situation where the futures price is above the expected future spot price.
Continuous Compounding
A way of quoting interest rates. It is the limit as the assumed compounding interval is made smaller and smaller.
Contract for Difference
A derivative product to trade the price differential over an indefinite time period.
Contract Size
The unit of trading on a derivatives contract.
Control Variate Technique
A technique that can sometimes be used for improving the accuracy of a numerical procedure.
Convenience Yield
A measure of the benefits from ownership of an asset that are not obtained by the holder of a long futures contract on the asset.
Conversion Factor
A factor used to determine the number of bonds that must be delivered in the bond futures market.
Convertible
A convertible bond may be converted later into equity, some other bond or even a commodity
Convertible Bond
A corporate bond that can be converted into a predetermined amount of the company's equity at certain times during its life.
Convertible Rate FRN
An issue which carries the option to convert either from an initial floating rate note into a fixed rate bond or from a fixed rate bond into a floating rate note.
Convexity
A measure of the curvature in the relationship between bond prices and bond yields.
Convexity Adjustment
An overworked term. It can refer to the adjustment necessary to convert a futures interest rate to a forward interest rate.
Corporate Bond
??
Corporate Finance
The department of an investment bank dealing with takeovers, mergers and strategic advice to companies
Cost of Carry
The storage costs plus the cost of financing as asset minus the income earned on the asset.
CounterParty
The opposite side in a financial transaction.
CounterParty Risk
The risk involved if a counterparty fails to settle
Coupon
Interest payment made on a bond.
Coupon Rate
??
Coupon Stripping
Detaching the coupons from a bond and selling the coupons and the principal as individual zero coupon bonds
Coupons
Issued with bearer bonds to enable the holder to claim the interest.
Cover
An abbreviation of "short cover".
Covered Bond
Is a bond issued by a financial institution that remains on its balance sheet.
Covered Call
A short position in a call option on an asset combined with a long position in the asset.
Covered Warrant
A warrant issued by a party other than the originator or issuer of the underlying asset
Covered Writing
Where an option is sold against an existing position.
Credit Default Swap
An instrument that gives the holder the right to dell a bond for its face value in the event of a default by the issuer.
Credit Derivative
A derivative whose payoff depends on the creditworthiness of the one or more entities
Credit Enhancement
??
Credit Ratings
A measure of the creditworthiness of a bond issue.
Credit Risk
The risk that a loss will be experienced because of the default by the counterparty in a derivatives transaction.
Credit Spread
The interest rate spread between 2 debt issues of similar duration, maturity etc.
Credit Spread Option
Option whose payoff depends on the spread between the yields earned on two assets.
Credit Valuation Adjustment
This is the market value of the counterparty credit-risk.
CREST
The new UK Electronic settlement registering system introduced in July 1996.
CTD
Cheapest To Deliver bond
Cum Dividend
Means the buyer will get the recently announced dividend.
Cumulative
Applied to a Preference Share - if dividend is missed it is still owed to the holder.
Currency Risk
The risk of losses resulting from movements in currency exchange rates.
Currency Swap
??
Currency Warrants
??
Current Yield
??
CUSIP
??
Custodian
??
Cyclical Stock
The share prices of these companies move dramatically (up and down) relative to the economy.
Cylinder
??

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