Super Finance Glossary

Finance

Over 10,000 financial glossary terms...

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Browsing by the letter "C"

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Consumer Goods
Definition: Goods not used in production but bought for personal or household use such as food, clothing, and entertainment.
Consumer Interest
Definition: Interest paid on consumer loans; e.g., interest on credit cards and retail purchases.
Consumer Price Index (CPI)
Definition: The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of US inflation. The US Department of Labor publishes the CPI every month.
Contagion
Definition: Excess correlation of delivering or bond returns. For example, under usual conditions we might observe a certain level of correlation of market returns. A period of contagion would be associated with much higher-than-expected correlation. Some examples are the conjectured contagion in East Asian markets beginning in July 1997 when the Thai currency devalued and the impact across many emerging markets of the Russian default. Contagion is difficult to identify because you need some sort of measure of the expected correlation. It is complicated because correlations are known to change through time, for example, see Erb, Harvey and Viskanta's article in the 1994 Financial Analysts Journal. In periods of negative returns, correlations (and volatility) are known to increase, so what might appear to be excessive may not be contagion.
Contango
Definition: A market condition in which futures prices are higher in the distant delivery months.
Contingency
Definition: An additional amount or percentage added to any cash flow item (ie. Capex). Care is needed to ensure it is either to be spent or to remain as a cushion.
Contingency Graph
Definition: A plot of the net profit to a speculator in currency options under various exchange rate scenarios.
Contingency Order
Definition: In the context of general equities, order to buy one security, if the trader can sell another, usually given that certain price limits or conditions reach a certain level. Swap, switch order.
Contingent
Definition: In context of liabilities, those liabilities that do not yet appear on the balance sheet (ie. guarantees, supports, lawsuit settlements). For support or recourse, the trigger may occur at any time in the future.
Contingent Claim
Definition: A claim that can be made only if one or more specified outcomes occur.
Contingent Conversion Trigger
Definition: Used in the context of convertible instruments. The price of the stock must exceed the trigger price before the bond holder can convert to common stock at a pre-established conversion price. The trigger price exceeds the conversion price. In addition, after a certain number of years, the convertible instrument usually specifies that both the conversion price and the contingent conversion trigger will increase every year by, for example, a rate equal to LIBOR.
Contingent Deferred Sales Charge (CDSC)
Definition: The formal name for the load of a back-end load fund.
Contingent Immunization
Definition: An arrangement in which the money manager pursues an active bond portfolio strategy until an adverse investment experience drives the then-available potential return down to the safety net level. When that point is reached, the money manager is obligated to pursue an immunization strategy to lock in the safety-net level return.
Contingent Liability
Definition: Potential claims on bank assets for which any actual or direct liability is contingent upon some future event or circumstance. Contingencies usually result from off-balance sheet lending activities such as loan commitments and letters of credit. Other examples are pending litigation in which the bank is defendant and contingent liabilities arising from trust operations.
Contingent Order
Definition: An order which can be executed only if another event occurs; i.e. "sell Oct 45 call 7-1/4 with stock 52 or lower".
Contingent Pension Liability
Definition: Under ERISA, a firm is liable to its pension plan participants for up to 39% of the net worth of the firm.
Contingent Voting Power
Definition: Enables preferred stockholders to vote when the company fails to satisfy the agreement between itself and the preferred stockholders.
Continuous Compounding
Definition: The process of accumulating the time value of money forward in time on a continuous, or instantaneous, basis. Interest is earned constantly, and at each instant, the interest that accrues immediately begins earning interest on itself.
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