Call Feature

The provisions in interest-bearing securities, giving the issuer the option to redeem the security at a predetermined price before the date of maturity.

 

Call Option

The right but not the obligation of an investor to buy a specified quantity of a financial instrument at a predetermined price and period.

 

Call-over

A system of trading in some stock exchanges where stockbrokers assemble at the trading floor at designated times to bid or make offers as the list of securities is read aloud i. e. as the board is called.

 

Capital Gains

Gains made at the disposal (sale) of securities by an investor. It is the difference between the price at which the securities were bought and the price at which they were sold. When such difference is positive, it is said to be a capital gain. When the difference is negative, this is a capital loss.

 

Capital Market

Financial market which trades in medium to long-term financial instruments (stocks and bonds) with maturity in excess of one year. It is a network of participants, instruments and facilities which function basically to facilitate efficiently, the flow of savings into long-term investment for socio-economic development.

 

Capital Structure

The various components of a company's long-term capital such as debentures, ordinary and preference shares.

 

Capitalization Issue

A new allotment of shares made in proportion to existing shares out of accumulated reserves. Usually known as';scrip'; or a ';bonus'; issue. Such issues only increase the outstanding shares but add nothing to the assets of a company. (See bonus issues).

 

Cash Account

An account maintained by a stockbroker for cash settlement of transactions.

 

Cash Dividend

The portion of after-tax profit that is declared by a company and distributed to shareholders in proportion to their holdings in the company.

 

Cash Settlement

Payment for securities transactions in the secondary market in cash as distinct from normal account settlement.

 

Circuit Breaker

A mechanism which temporarily stops trading in US stock and commodity exchanges when the price index drops by a specified point within a specified period. The device was introduced following the 1987 stock market crash.

 

Clearing House

An organization, usually a subsidiary or an arm of a futures exchange which stands as a counter party in every futures transaction in order to guarantee performance of the contract. The clearing house thus registers, matches, monitors and settles every transaction.

 

Clearing System

Procedure put in place by a securities exchange to compare trading details between stockbrokers before settlement takes place.

 

 

Closed-End Investment Company

An investment company quoted on a securities exchange which pools funds from the public through the flotation of equities, and invests the monies usually in listed securities. The securities of the company are thus tradeable like any other securities on an exchange. Unlike the open-end funds (unit trust or mutual funds), closed-end companies have fixed capital and thus do not stand ready to redeem or issue additional securities. They are sometimes referred to as investment trust company.

 

Closing Prices

Final prices at the close of transaction on an exchange.

 

Collateral

Financial or physical assets pledged by a borrower as a guarantee for the repayment of a loan or bond in the event of a default

 

Completion Board Meeting

The meeting of the board of directors of a company making a security offering with all the parties to the issue such as issuing house, solicitors, accountants and registrars. It is during this meeting that all documents relating to the issue are signed by the directors and the parties. It is only after the completion board meeting and the lodgment of copies of the signed documents with the SEC that the securities can be distributed to the public.

 

Conglomerate

A company having a group of subsidiaries engaged in unrelated activities.

 

Conglomerate Merger/Acquisition A business combination in which the integrating companies are in unrelated lines of business.

 

Consolidation of Companies

A merger of two or more companies in which an entirely new company evolves to take over the assets and liabilities of the merging companies. Cross Border Listing/Offering: Securities listings or offerings by an entity (corporate or government) in a country or countries other than the home country.

 

Convertible Security

A security which carries a provision giving the holder and or the issuer the option to turn the security into another class of security of the issuer at a later date e.g. to convert a debt instrument into equity of the company.

 

Cost of Raising Capital

The price paid by an issuer of securities to raise funds in the capital market. There are usually several cost components borne by the issuer, including fees to various advisers, issuing houses, other operators, and regulatory authorities. Also included are publicity, printing and distribution expenses.

 

Counterparty

An individual or institution which is party to a contract.

 

Counterparty Risk

The probability that a party to an agreement (counterparty) would default on his obligation.

 

Coupon Rate

The rate of interest paid by a corporate entity or a government on its bond (debt) issue. The coupon rate could either be fixed or floating.

 

Covenant

A provision which spells out the dos and don'ts of the debtor in a trust deed for the purposes of protecting the creditors of a company or government in a loan arrangement.

 

Cum Dividend With dividend

The buyer of an equity cum dividend is entitled to the dividend already declared or to be declared by the company whose security was bought.

 

Cum Rights With rights.

A buyer of a security marked cum rights is entitled to participate in an impending rights issue of the company. 65 Cumulative Preference Shares Preference shares having a provision which allows dividends not paid in a particular year or period to be accumulated and carried forward to a later date.

 

Current Asset

Short-term assets of a company such as cash and other instruments which are convertible into cash within one year. These include inventory, money market instruments, etc.

 

Current Liabilities

Obligations of a company expected to be settled by it within one year.

 

Current Yield

The income earned on an investment within a year, expressed as a percentage of the present value of the investment. For equity, it is derived by dividing the annual dividend by the market price and for bonds, by dividing the annual interest (income) by the market price of the investment.

 

Custodian

An institution which holds for safe keeping, for clients, documents and assets such as securities. In many instances, (in respect of securities), custodians are given powers to vote and exercise other rights including collection of investment income on behalf of their clients.