Call
A call is an option that an issuer can attach to its bonds or preferred securities. The call option gives the issuer the right, but not the obligation, to call the bonds away from their holders at certain preset times and according to certain preset conditions .

Call Option
Agreement that gives an investor the right but not the obligation to buy a stock, bond, commodity or other instrument at a specified price within a specific time period.

Call Risk
Risk an owner of a callable investment assumes that the investment might be called away prior to its maturity date.

Callable
A bond with an embedded call option is commonly referred to as a callable bond.

Capital Appreciation
During the period an investment asset is owned capital appreciation describes the unrealized gain on that investment. There are generally no tax consequences to unrealized investment capital appreciation.

Capital Assets
For individuals a capital asset is any kind of investments. In corporations, besides investments, they are assets of a long term or permanent nature used in the production of income like machinery, buildings, land etc. They must be considered separate from inventory.

Capital Depreciation
During the period an investment asset is owned capital depreciation describes the unrealized loss on that investment. There are generally no tax consequences to unrealized investment capital depreciation.

Capital Gain
Once an investment asset is sold or disposed of any profit realized is known as a capital gain. They generally do have tax consequences.

Capital Loss
Once an investment asset is sold or disposed of any loss realized is known as a capital loss. Capital losses generally do have tax consequences.

Cash Flow
Has several important meanings in finance and accounting, but with regard to fixed income investments cash flow describes the stream of periodic interest payments which results from the ownership of fixed income securities.

Cash Surrender Value
Amount that can be recovered by cashing in or borrowing against a life insurance policy.

Certificate of Deposit
A money market instrument issued by financial institutions which has a set interest rate and maturity date. Terms usually run from 90 days to 4 years.

Certified Financial Planner (CFP)
The best-known financial planning designation, given to qualifying planners by the CFP Board of Standards, of Denver.

Charitable Lead Trust
A trust that pays a charity income from a donated asset for a set number of years, after which time the principal goes to the donor's beneficiaries with reduced estate or gift taxes.

Charitable Remainder Trust
A trust that allows people leave assets to a charity and receive a tax break but still retain income for life. This works best for people with a large appreciated asset, which, if sold, would generate large capital-gains taxes.

Chicago Board of Trade (CBOT)
An exchange where grain, gold, and Treasury Bond futures and options are traded.

Churning
Excessive trading in a customer's brokerage account, done to generate increased commission income. Churning is a securities law violation. In the stock market, it refers to a period of heavy trading activity but few sustained price trends and little overall movement in stock market indexes.

Closed-end Fund
Type of fund that issues a set number of shares and typically trades on a stock exchange.

Collateral Trust Bond
Corporate debt security backed by other securities, usually held by a bank or other trustee. Such bonds are backed by collateral trust certificates and are usually issued by parent corporations that are borrowing against the securities of wholly owned subsidiaries.

Collateralized Mortgage Obligations (CMO)
Mortgage-backed securities that are carved into an array of bonds of varying maturity, coupon and risk.

Commercial Bank
A bank owned by shareholders that accepts deposits, makes commercial and industrial loans, and provides other banking services for the public. Also called a full-service bank.

Commercial Paper
Short-term obligations with maturities ranging from 2 to 270 days issued by banks, corporations, and other borrowers to investors with temporarily idle cash. Such instruments are unsecured and usually discounted, although some are interest-bearing.

Compound Interest
Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.

Compounding
A process whereby the value of an investment increases exponentially over time due to compound interest.

Consumer Price Index (CPI)
A gauge of inflation that measures changes in the prices of consumer goods. The index is based on a list of specific goods and services purchased in urban areas. It is released monthly by the Labor Department.

Convertible Bond
A bond that investors may exchange for stock on some future date under certain conditions.

Convexity
Duration of a bond is not constant over changes in the underlying interest rate market. The rate at which duration changes as market yields change is referred to as convexity.

Corporate Bonds
Debt instrument issued by a private corporation, as distinct from one issued by a government agency or a municipality. Corporate bonds have four distinguishing features: (1) they are taxable; (2) they have a par value of $1000; (3) they have a term maturity; (4) they are traded on major exchanges

Corporation
A business entity treated as a person in the eyes of the law. It is able to own property, incur debts, sue, and be sued.

Cost Basis
Original cost of an asset, used in determining capital gains. It usually is the purchase price, but in the case of an inheritance it is the appraised value of the asset at the time of the donor's death.

Cost of Living Adjustment (COLA)
An annual adjustment in wages to offset a change (usually a loss) in purchasing power, as measured by the Consumer Price Index.

Coupon Rate
Refers to the stated amount of periodic interest paid annually on a fixed income investment.

Credit Rating
The assessment made on a particular issuer's creditworthiness. Ratings range from triple A (very highly rated) to D (already in default). Careful study of an issuer's financial health precedes any ratings decision. There are a number of firms that track issuers and make ratings decisions: the two largest are Standard & Poors (S&P) and Moody's.

Credit Risk
Risk an issuer will be perceived as more likely to miss an interest or principal payment. The increased likelihood of default will depress the price of the bond.

Current Income
Refers to the amount of coupon interest (dividends in the case of stocks) which a particular investment, or portfolio, returns to an investor.

Current Liabilities
Liabilities that are due or will become due in the next year or the next operating cycle, whichever is longer.

Current Ratio
Ratio of current assets to current liabilities

Current Yield
A measure of an investor's return on a bond. Calculated by dividing the coupon rate by the purchase price, then multiplying by $1,000.

CUSIP Number
An identification number for securities. CUSIP is an acronym for Committee on Uniform Securities Identifying Procedures.

Cyclical Stocks
Shares that tend to rise during an upturn in the economy and fall during a downturn.