Capitalization Issue - The process whereby money from a company's reserves is converted into capital and then distributed to shareholders as new shares, in proportion to their original holdings, also known as bonus or scrip issue.
Cap - An option like contract for which the buyer pays a fee or premium, to obtain protection against a rise in a particular interest rate above a certain level. For example, an interest rate cap may cover a specified principal amount of a loan over a designated time period such as a calendar quarter. If the covered interest rate rises above the rate ceiling, the seller of the rate cap pays the purchaser an amount of money equal to the average rate differential times the principal amount times one quarter.
Certificate of Deposit (CD) - A deposit with a fixed time period and a fixed rate of interest.
Clearing System - A mechanism for calculation of mutual positions within a group of participants with a view to facilitating the settlement of their mutual obligations on a net basis.
Collar - The simultaneous purchase of a cap and the sale of a floor with the aim of maintaining interest rates within a defined range. The premium income from the sale of the floor reduces or offsets the cost of buying the cap.
Collateral Provider - An entity which has the contractual ability to purchase bar instruments directly from the issuer. Also known as Master Collateral Commitment Holders.
Conditional SWIFT - A funds transfer method which uses Society for Worldwide Interbank Financial Telecommunications protocols to transfer funds conditionally between banks, subject to the performance of a specified party.
Commission - The fee that a broker charges clients for dealing on their behalf.
Commitment Holder - A wealthy private party buying guarantees from the issuing banks, reselling them to other banks/brokers. Commitment holders are not allowed to trade or do business on their own behalf. Other designation: provider.
Compound Yield - The total return on investment, consisting of the distribution (dividend, interest) and the capital gain or loss, in % of the investment amount.
Consideration - The money value of a transaction (number of shares multiplied by the price), before adding commission, stamp duty, etc.
Contract exit for non-performance - A condition in a financial agreement that enables the investor to take back his funds if the result represented is not achieved.
Contract Note - The day that a transaction takes place, the broker sends the client a document detailing the transaction, including full title of the stock, price, consideration and stamp duty (if applicable).
Cover - The total net profit a company has available for distribution as dividend, divided by the amount paid, gives the number of times that the dividend is covered.
Credit Equivalent - Value amount representing the credit risk exposure in off-balance sheet transactions. In the case of derivatives, credit equivalent value represents the potential cost at current market prices of replacing the contract's cash flows in the case of default by the counter-party.
Credit Risk - The risk that a counter party to a transaction will fail to perform according to the terms and conditions of the contract, thus causing the holder of the claim to suffer a loss.
Currency Swaps - A transaction involving the exchange of cash flows and principal in one currency for those in another with an agreement to reverse the principal swap at a future date.
Current Account - A bank deposit that can be withdrawn by the depositor at any time.
Current Exposure Method - Term used in the Basle Capital Accord to denote a method of assessing credit risk in off-balance sheet transactions, consisting of adding the market to market replacement cost of all contracts and an amount for potential credit exposure arising from future price- or volatility changes.