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Glossary of Investment Terms

 

C

 

Callable

 

Redeemable by the issuer before the scheduled maturity date.

 

 

 

Callable CD

 

Certificate of Deposit that can be redeemed at par prior to its original stated maturity at the option of the issuer.

 

 

 

Call Risk

 

Risk to a bond holder that a bond may be redeemed before scheduled maturity. The main risk of having a bond called before maturity is that the investor will be unable to replace the bond's yield with another similar quality bond paying the same yield.

 

 

 

Cash Dividend

 

A distribution of earnings to shareholders, prorated by class of security and paid in cash.

 

 

 

Certificate of Deposit (CD)

 

Debt instrument issued by a bank that usually pays interest. Maturities range from a few weeks to several years.

 

 

 

Contingent Deferred Sales Charge (CDSC)

 

A mutual fund term used to describe a fee imposed when shares are redeemed within a given time period.

 

 

 

Clearing Agent

 

An organization that is exchange-affiliated and facilitates the validation, delivery and settlement of securities transactions.

 

 

 

Closed-End Fund

 

A mutual fund term used to describe a type of Investment Company that has a fixed number of shares that are publicly traded.

 

 

 

Combination

 

An options trading strategy involving two long or two short positions with different expiration dates or strike prices.

 

 

 

Concentrated Account

 

Formal memorandum from a broker to a client giving details of a securities transaction. When a broker acts as a dealer, the confirmation must disclose the fact to the customer.

 

 

 

Contribution

 

Deposit made to an Individual Retirement Account (IRA). According to IRS regulations, contributions must be made with cash. Contributions cannot be made in the form of stock to an IRA account.

 

 

 

Corporate Bond

 

Debt instruments issued by companies as a way to raise cash for capital expansion or growth.

 

 

 

Coupon or Coupon Rate

 

Interest rate on a debt security the issuer promises to pay to the holder until maturity, expressed as an annual percentage of face value.

 

 

 

Covered Calls

 

An options strategy involving the sale of a call contract while having the equivalent number of shares held in case of exercise.  Considered a conservative strategy in options and is used to produce income.

 

 

 

CUSIP

 

Number identifying all stocks and registered bonds, using the Committee on Uniform Securities Identification Procedures (CUSIP). Brokers use a security's CUSIP number to get further information.

 

 

 

Custodial Account

 

An account created for a minor, where the custodian manages cash and other property gifted to minors under the Uniform Gifts to Minors Act (also known as the Uniform Transfers to Minors Act). When the child reaches the age of majority, usually 18, they have full discretion over the account, unless the account is set up in a trust controlled be the parent.

 

 

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