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C

Investment and Trading Glossary

A B C D E F G H I J K L M N O P  Q  R S T U V W X Y Z

 

C

 

CAPITAL

Accumulated money or goods available for use in producing more money or goods.

CAPITAL APPRECIATION

A rise in the market price of an asset.

CAPITAL ASSET

All tangible property, including securities, real estate and other property, held for the long term.

CAPITAL CONTRIBUTION

The amount of a participant’s investment in a direct participation program, not including units purchased by the sponsors.

CAPITAL GAIN

The profit realized when a capital asset is sold for a higher price than the purchase price.

CAPITALIZATION

The sum of a corporation´s long-term debt, stock and surpluses.

Syn. invested capital.

See also capital structure.

CAPITAL LOSS

The loss incurred when a capital asset is sold for a lower price than the purchase price.

CARRYING BROKER

See clearing broker

CASH ACCOUNT

An account in which the customer is required by the SEC´s Regulation T to pay in full for securities purchased not later than two days after the standard payment period set by the NASD´s Uniform Practice Code.

Syn. Special  cash account.

See also Margin account.

CASH DIVIDEND

Money paid to a corporation´s stockholders out of the corporation´s current earnings or accumulated profits. All dividends must be declared by the board of directors.

CERTIFICATE OF DEPOSIT (CD)

See negotiable certificate of deposit.

CHICAGO STOCK EXCHANGE (CHX)

Regional exchange that provides a listed market for smaller business and new enterprises. In 1949 the exchange merged with the St. Louis, Cleveland and Minneapolis/St. Paul exchange to form the Midwest Stock Exchange, but in 1993 the original name was reinstated.
The Chicago Stock Exchange (CHX) is a stock exchange in Chicago, Illinois, U.S. The exchange is a national securities exchange and self-regulated organization, which operates under the oversight of the U.S. Securities and Exchange Commission (SEC). The Chicago Stock Exchange is the third most active stock exchange in the United States by volume, and the largest outside New York City. The Chicago Stock Exchange is currently located at 440 South LaSalle Street (One Financial Place).

CHURNING

Excessive trading in a customer´s account by a registered representative who ignores the customer´s interests and seeks only to increase commissions; this violates the NASD Rules of Fair Practice.

Syn. overtrading.

CHX

See Chicago Stock Exchange.

CLEARING AGENCY

An intermediary between the buy and sell sides in a securities transaction that receives and delivers payments and securities. Any organization that fills this function, including a securities depository but not including a Federal Reserve Bank, is considered a clearing agency.

CLEARING BROKER-DEALER

A broker-dealer that clears its own trades as well as those of introducing brokers. A clearing broker-dealer can hold customers securities and cash.
Syn. carrying broker.

See also introducing broker.

CLOSED-END INVESTMENT COMPANY

An investment company that issues a fixed number of shares in an actively managed portfolio of securities. The market price of the shares may be of several classes; they are traded in the secondary marketplace, either on an exchange or over the counter. The market price of the shares is determined by supply and demand and not by net asset value.

Syn. Publicly traded fund.

See also dual-purpose fund; mutual fund.

COINCIDENT INDICATOR

A measurable economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy, personal income and industrial production.

See also lagging indicator; leading indicator.

COMMERCIAL BANK

An institution that is in the business of accepting deposits and making business loansCommercial banks may not underwrite corporate securities or most municipal bonds.

See also investment banker.

COMMISSION

A service charge assessed by an agent in return for arranging the purchase or sales of a security. A commission must be fair and reasonable, considering all the relevant factors of the transaction.

COMMITTEE ON UNIFORM SECURITY IDENTIFICATION PROCEDURES (CUSIP)

A committee that assigns identification numbers and codes to all securities, to be used when recording all buys and sell orders.

COMMODITY

Any bulk good traded on an exchange or in the cash market; examples include metals, grains and meats.

COMMON STOCK

A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy.

See also equity; preferred stock.

COMPLIANCE DEPARTMENT

The department within a brokerage firm that oversees the trading and market making activities of the firm, It ensures that the employees and officers of the firm are abiding by the rules and regulations of the SEC, exchange and SRO’s.

CONCESSION

The profit per bond or share that an underwriter allows the seller of new issue securities. The selling group broker-dealer purchases the security from the syndicate member at the public offering price minus the concession.

Syn. reallowance.

See also takedown

CONSOLIDATED TAPE SYSTEM (CTS)

A service of the New York Stock Exchange that delivers real-time reports of securities transactions to subscribers as they occur on the various exchanges.

CONTRACTUAL PLAN

A type of accumulation plan in which the investor agrees to invest a specific amount of money in the mutual fund during a specific period.

Syn. penalty plan; prepaid charge plan.

See also front-end load; mutual fund; spread load; voluntary accumulation plan.

CONTROL PERSON

(1)    A director, officer or other affiliate of an issuer.

(2)    A stockholder who owns at least 10% of any class of a corporation´s outstanding securities.

See also affiliate; insider.

COUPON BOND

A debt obligation with coupons representing semiannual interest payments attached; the coupons are submitted to the trustee by the holder to receive the interest payments. No record of the purchaser is kept by issuer, and the purchaser´s name is not printed on the certificate.

Syn. bearer bond.

See also book-entry security; registered; registered as to principal only.

COUPON YIELD

See nominal yield

CURRENT MARKET VALUE (CMV)

The worth of the securities in an account. The market value of listed securities is based on the closing prices on the previous business day.
Syn. Long market value.

 

 

CURRENT YIELD

The annual rate of return on a security, calculated by dividing the interest or dividends paid by the security´s current market price.

See also bond yield.

CUSIP

See Committee in Uniform Security Identification Procedures

CUSTODIAN ACCOUNT

An account in which a custodian enters trades on behalf of the beneficial owner, often a minor.

See also custodian.

CUSTODIAN

An institution or person responsible for making all investment, management and distribution decisions in an account maintained in the best interests of another. Mutual funds and contractual plan companies have custodians responsible for safeguarding certificates and performing clerical duties.

See also mutual fund custodian; plan custodian.

CUSTOMER

Any person who opens a trading account with a broker-dealer. A customer may be classified in terms of account ownership, trading authorization, payment method of security traded.

CUSTOMER AGREEMENT

A document that a customer must sign when opening a margin account with a broker-dealer; it allows the firm to liquidate all or a portion of the account if the customer fails to meet a margin call.