Financial and Investment Glossary
Financial Dictionary
Cafeteria Plan
A benefits plan that allows employees to choose from a selection of taxable and non-taxable benefits, often including 401(k) contributions, health insurance, and flexible spending account contributions. Employees can elect to divert a portion of their taxable cash compensation and apply it towards qualified nontaxable benefits.
Calendar Year Total Return
The increase or decrease in a fund's net asset value from the beginning of the calendar year (January 1st) until the end of the calendar year (December 31st), including dividends or interest payments and capital gains or losses, but excluding sales charges or loads, redemption fees and taxes.
California Tax-Exempt Money Market Funds
Fund invests in municipal obligations of California, (double tax-exempt) or city, (triple tax-exempt) with dollar-weighted average maturities of less than 90 days. Intend to keep a constant NAV.
Call
Related to Fixed Income: The right to redeem a callable bond before its scheduled maturity.
Related to Options: An option contract that gives the holder the right to buy the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain, fixed period of time.
Call Date
Represents the date on which the issuer may redeem part or all of the security, prior to maturity.
Call Feature
A clause in a senior security that permits the issuing company to buy the security back at a predetermined price as long as the purchase is made before the security matures.
Call Option
Related to Fixed Income: The right to redeem a callable bond before its scheduled maturity. Related to Options: See call/put definition below.
Call Premium
Amount over par that an issuer has to pay an investor for redeeming the security early.
Call Price
The price, specified at issuance, at which a bond or preferred stock can be redeemed by the issuer.
Call Related to Options
An option contract that gives the buyer (holder) the right to purchase, and gives the seller (the writer) the obligation to sell a specified number of shares of the underlying stock at the given strike price on or before the expiration date of the contract.
Call Risk
The cash flow risk resulting from the possibility that a callable bond will be redeemed before maturity.
Call/Put
Call: An option contract gives the holder the right to buy the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain, fixed period of time.
Put: An option contract gives the holder the right to sell the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain fixed period of time.
Callable at Make Whole
A feature that allows an issuer to redeem all of a security prior to the bond's maturity.
Callable Bond
A bond that the issuer is permitted or required to redeem prior to the stated maturity date.
Capital
Wealth in the form of money or property, which is usually available for investment.
Capital Appreciation
An increase in the market value of money or property.
Capital Assets
Tangible items used in the operation of a business but not consumed in the course of those operations; also known as fixed assets.
Capital Expenditures
The payment of money by a business to purchase or improve assets such as buildings or machinery.
Capital Gain
The difference between an asset's purchase price and selling price. (The difference is called a "capital gain" only if it's a positive amount.)
Capital Loss
A loss an investor suffers after selling an asset. Investors can write off capital losses on their taxes. The rules are that you can write off any capital loss against an equal amount of capital gain.
Capital Preservation
The degree of comfort of the fund's ability to minimize risk of principal.
Cash
In an investment portfolio, the relatively stable investments that can be easily changed into currency, such as a checking account, Treasury bills, a money market account, or a money market mutual fund.
Cash Account
Account holding cash that may be used to make purchases.
Cash Balance
The cumulative dollar amount in the cash account or the cash portion of the margin account. It includes both settled and unsettled transactions.
Cash Flow
A measure of the cash receipts and cash payments a company makes over a given time period. If a company has negative cash flow, the company must borrow money to operate its business. If a company has positive cash flow, the company has money available to spend on research and development, to expand operations, and to pay dividends to investors.
Cash Value
Related to Insurance Policy:
The current worth of the policy (net cash surrender value plus any outstanding loan amount).
Cash/Cash Equivalents
The value of assets that can be converted into cash immediately. Includes bank deposits and marketable short-term securities, such as Treasury Bills and bankers' acceptances.
Certificate Of Deposit (CD)
A bank-issued deposit instrument with a set maturity and interest rate. Maturities range from a few weeks to several years.
Change (Chg)
The increase or decrease in the price of securities, mutual funds, or indexes based on the previous business day's closing price. Changes can be viewed as percent changes (%) or dollar changes ($).
Chicago Board Options Exchange (CBOE)
In 1973, the Chicago Board Options Exchange created "listed options" that became the standard, and option prices were set in an auction market nearly identical to the stock exchanges.
Class
This field indicates whether an annuity was purchased as a qualified or non-qualified contract.
Class (LOB)
A category for tax qualifications- nonqualified, ira, 403b, nra, etc.
Close
A security's final trade price at the end of a trading day.
Closing Balance
Total value of all portfolio holdings, as of the close of the last trading day of a given period.
Closing Price
The final reported transaction price for the security at the close of a trading session.
Closing Purchase
A transaction in which the purchaser's intention is to reduce or eliminate a short position in a given series of options.
Closing Sale
A transaction in which the seller's intention is to reduce or eliminate a long position in a given series of options.
Co-Annuitant
Additional person that the contract is based on.
Co-Owner
If more than one person has ownership rights to the contract, they are known as co-owners.
Collectibles
An object that has potential investment value.
Collective Trust
A trust to provide a collective investment vehicle. Investment in a collective trust may, by its terms, be available only to tax-qualified employee benefit plans.
Commercial Paper
An unsecured obligation issued by a corporation to finance its short-term credit needs, such as accounts receivable and inventory. Maturities typically range from 2 to 270 days.
Commissions
A fee brokerages charge when securities are bought or sold.
Common Stock
Shares of ownership in a corporation; normally referred to simply as stock.
Community Property (COMM)
Certain states recognize assets as 'community property' between married persons. In general, these laws dictate that any property acquired after marriage is the common property of both husband and wife. The distribution of the assets upon the death of one spouse varies according to each state's laws.
Compound Interest
When interest is earned on both the principal amount and any interest already earned.
Compounding
When interest is paid on the amount of interest already earned, as well as on principal.
Conservative
Used to describe an investment that is relatively stable and predictable.
Consumer Debt
Debt incurred for consumable or depreciating assets that aren't considered investments. This includes credit card debt, store-financed consumer purchases, car loans, family loans that will be repaid, etc.
Consumer Price Index (CPI)
The most widely accepted indicator of inflation in the United States. The index is based on the aggregate price of a weighted
Contingent Deferred Sales Charge (CDSC)
A deferred sales charge, which is paid at the time of redemption and generally decreases with the amount of time that fund shares are held before sale, ultimately declining to 0%. It is referred to as a contingent sales charge because of such declining schedule. The CDSC is also commonly called a back-end load.
Contract
An agreement between two or more parties to perform or not perform certain actions.
Contract Number
The identification number assigned to the contract by the issuing life insurance company.
Contract Size
The amount of the underlying asset covered by the options contract. This is 100 shares for one stock option contract unless adjusted for a special event, such as a stock split or a stock dividend.
Contract Status
The status of the contract, indicating that the contract is in underwriting/issue, active, or terminated.
Contract Value
The value of the contract on the valuation date before the surrender charges or administrative fees have been deducted.
Conversion Feature
The process of converting a convertible security, such as a bond or preferred stock, into common stock.
Conversion Parity
The price that an investor effectively pays for common stock by purchasing a convertible security, such as a bond or preferred stock, and then exercising the conversion option. Also called Market Conversion Price.
Conversion Premium
The dollar or percentage amount by which the price of a convertible security, such as a bond or preferred stock exceeds the current market value of the common stock into which it could be converted.
Conversion Price
The price, specified when issued, at which a given convertible security, such as a bond or preferred stock, can be converted to common stock.
Conversion Ratio
The number of shares of common stock that could be obtained by converting each share of a convertible security.
Conversion Value
The value of a convertible security if it is converted immediately.
Convertibles
Securities, Usually preferred stock or bonds, that are exchangeable into a predetermined number of shares of common stock at a set price. Convertibles may also be exchanged into other forms of the security, but it is unusual. Convertible securities are usually bought by investors who want higher income than what can be received from common stock combined with a greater potential for appreciation than what can be received from regular bonds. A corporation will issue convertibles to enhance the marketability of their securities.
Corporate Bonds
Debt instruments issued by private corporations.
Corporate Debt Funds A-Rated
Fund invests at least 65% of fund assets in corporate debt issues rated "A" or better or government issues.
Corporate Debt Funds BBB-Rated
Fund invests at least 65% of fund assets in corporate and government debt issues rated in the top four grades.
Corporation
A legal entity formed by one or more persons. A corporation is formed under the laws of a specific state and is legally defined as having a separate existence from that of its founders or owners.
Cost Basis
The price paid for an investment when it was originally purchased.
Coupon
Interest rate on a debt security the issuer promises to pay to the holder until maturity, expressed as an annual percentage of face value. For example, a bond with a 10% coupon will pay $10 per $100 of the face amount per year, usually in installments paid every six months.
Coupon Dates
The dates on which coupons are scheduled to be paid. This day is used to calculate interest due to the holder.
Coupon Frequency
How regularly an issuer pays the coupon to holder.
Cover
Indicates the repurchase of previously sold contracts or shares, known as covering a short position. Short covering is synonymous with liquidating a short position, no longer expecting that stock to drop in value.
Covered Call
Selling a call option contract to open when the account holds the underlying security.
Covered Call Option Writing
A strategy in which one sells call options while simultaneously owning an equivalent position in the underlying security or strategy in which one sells put options and simultaneously is short an equivalent position in the underlying security.
Covered/Uncovered
A covered option contract is backed by the shares underlying the option. An uncovered option contract is not backed by the shares underlying the option. An uncovered option is also called a naked option. A put may be covered when it is backed by sufficient cash to purchase stock upon assignment.
Credit Balance
The amount of money held in your margin account after all trading commitments and other financial obligations have been paid in full.
Credit Score
A number that indicates an individual's credit worthiness. Credit bureaus determine the score with a statistical program.
Cumulative Dividend
A provision requiring that unpaid accumulated preferred stock dividends must be paid before any common stock dividends are.
Cumulative Gain/Loss
Estimated market value of your shares minus your Total Client Investment. Cumulative Gain/Loss is the capital appreciation (depreciation) of all shares, including shares purchased through reinvestment, since their date of purchase in this account. This figure does not include any sales charges or fees you may have already paid or any sales charges, fees or taxes you may be required to pay upon the sale of your shares.
Cumulative Preferred Stock
Preferred stock on which dividends accrue in the event that the issuer does not make timely dividend payments. Most preferred stock is cumulative preferred.
Cumulative Total Return
The increase or decrease in a fund's net asset value from the beginning of a time period until the end of that time period, including dividends or interest payments and capital gains or losses, but excluding sales charges or loads, redemption fees and taxes. Cumulative Total Return is expressed as a percentage and is computed by dividing the change in the fund's net asset value over the specified time period by the fund's net asset value at the beginning of the time period.
Cumulative Voting
A voting system that gives minority shareholders more power, by allowing them to cast all of their board of director votes for a single candidate, as opposed to regular or statutory voting, in which shareholders must vote for a different candidate for each available seat. see also common-law voting, proportional representation.
Currency Fluctuation
Changes in the value of foreign currency compared with the U.S. dollar. This is one of the risks of international investing.
Current Balance
The balance of all transactions entered as of today.
Current Call Date
Represents the current date on which the issuer may redeem part or all of the security, prior to maturity.
Current Qty
The existing number of trading units of a specific security.
Current Ratio
A company's current assets divided by its current liabilities.
Current Trade Date
The existing date an account reflects security sale or purchase transaction. Settlement date for equities is three business days.
Current Yield
Annual dollar coupon interest divided by current market price. Current Yield differs from coupon rate that expresses interest as an annual percentage of face value.
CUSIP Number
A specific nine digit number which identifies all stock and registered bonds, using the Committee on Uniform Securities Identification Procedures (CUSIP). This number also will be listed on trade confirmations.
Custodian
An adult person selected to manage the assets of a minor under either the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. The custodian is responsible for investing and reinvesting a minor's assets prudently and disbursing the assets to the minor, or for the minor's benefit.
A benefits plan that allows employees to choose from a selection of taxable and non-taxable benefits, often including 401(k) contributions, health insurance, and flexible spending account contributions. Employees can elect to divert a portion of their taxable cash compensation and apply it towards qualified nontaxable benefits.
Calendar Year Total Return
The increase or decrease in a fund's net asset value from the beginning of the calendar year (January 1st) until the end of the calendar year (December 31st), including dividends or interest payments and capital gains or losses, but excluding sales charges or loads, redemption fees and taxes.
California Tax-Exempt Money Market Funds
Fund invests in municipal obligations of California, (double tax-exempt) or city, (triple tax-exempt) with dollar-weighted average maturities of less than 90 days. Intend to keep a constant NAV.
Call
Related to Fixed Income: The right to redeem a callable bond before its scheduled maturity.
Related to Options: An option contract that gives the holder the right to buy the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain, fixed period of time.
Call Date
Represents the date on which the issuer may redeem part or all of the security, prior to maturity.
Call Feature
A clause in a senior security that permits the issuing company to buy the security back at a predetermined price as long as the purchase is made before the security matures.
Call Option
Related to Fixed Income: The right to redeem a callable bond before its scheduled maturity. Related to Options: See call/put definition below.
Call Premium
Amount over par that an issuer has to pay an investor for redeeming the security early.
Call Price
The price, specified at issuance, at which a bond or preferred stock can be redeemed by the issuer.
Call Related to Options
An option contract that gives the buyer (holder) the right to purchase, and gives the seller (the writer) the obligation to sell a specified number of shares of the underlying stock at the given strike price on or before the expiration date of the contract.
Call Risk
The cash flow risk resulting from the possibility that a callable bond will be redeemed before maturity.
Call/Put
Call: An option contract gives the holder the right to buy the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain, fixed period of time.
Put: An option contract gives the holder the right to sell the number of shares of the underlying security that is covered by the contract at a specified/fixed price for a certain fixed period of time.
Callable at Make Whole
A feature that allows an issuer to redeem all of a security prior to the bond's maturity.
Callable Bond
A bond that the issuer is permitted or required to redeem prior to the stated maturity date.
Capital
Wealth in the form of money or property, which is usually available for investment.
Capital Appreciation
An increase in the market value of money or property.
Capital Assets
Tangible items used in the operation of a business but not consumed in the course of those operations; also known as fixed assets.
Capital Expenditures
The payment of money by a business to purchase or improve assets such as buildings or machinery.
Capital Gain
The difference between an asset's purchase price and selling price. (The difference is called a "capital gain" only if it's a positive amount.)
Capital Loss
A loss an investor suffers after selling an asset. Investors can write off capital losses on their taxes. The rules are that you can write off any capital loss against an equal amount of capital gain.
Capital Preservation
The degree of comfort of the fund's ability to minimize risk of principal.
Cash
In an investment portfolio, the relatively stable investments that can be easily changed into currency, such as a checking account, Treasury bills, a money market account, or a money market mutual fund.
Cash Account
Account holding cash that may be used to make purchases.
Cash Balance
The cumulative dollar amount in the cash account or the cash portion of the margin account. It includes both settled and unsettled transactions.
Cash Flow
A measure of the cash receipts and cash payments a company makes over a given time period. If a company has negative cash flow, the company must borrow money to operate its business. If a company has positive cash flow, the company has money available to spend on research and development, to expand operations, and to pay dividends to investors.
Cash Value
Related to Insurance Policy:
The current worth of the policy (net cash surrender value plus any outstanding loan amount).
Cash/Cash Equivalents
The value of assets that can be converted into cash immediately. Includes bank deposits and marketable short-term securities, such as Treasury Bills and bankers' acceptances.
Certificate Of Deposit (CD)
A bank-issued deposit instrument with a set maturity and interest rate. Maturities range from a few weeks to several years.
Change (Chg)
The increase or decrease in the price of securities, mutual funds, or indexes based on the previous business day's closing price. Changes can be viewed as percent changes (%) or dollar changes ($).
Chicago Board Options Exchange (CBOE)
In 1973, the Chicago Board Options Exchange created "listed options" that became the standard, and option prices were set in an auction market nearly identical to the stock exchanges.
Class
This field indicates whether an annuity was purchased as a qualified or non-qualified contract.
Class (LOB)
A category for tax qualifications- nonqualified, ira, 403b, nra, etc.
Close
A security's final trade price at the end of a trading day.
Closing Balance
Total value of all portfolio holdings, as of the close of the last trading day of a given period.
Closing Price
The final reported transaction price for the security at the close of a trading session.
Closing Purchase
A transaction in which the purchaser's intention is to reduce or eliminate a short position in a given series of options.
Closing Sale
A transaction in which the seller's intention is to reduce or eliminate a long position in a given series of options.
Co-Annuitant
Additional person that the contract is based on.
Co-Owner
If more than one person has ownership rights to the contract, they are known as co-owners.
Collectibles
An object that has potential investment value.
Collective Trust
A trust to provide a collective investment vehicle. Investment in a collective trust may, by its terms, be available only to tax-qualified employee benefit plans.
Commercial Paper
An unsecured obligation issued by a corporation to finance its short-term credit needs, such as accounts receivable and inventory. Maturities typically range from 2 to 270 days.
Commissions
A fee brokerages charge when securities are bought or sold.
Common Stock
Shares of ownership in a corporation; normally referred to simply as stock.
Community Property (COMM)
Certain states recognize assets as 'community property' between married persons. In general, these laws dictate that any property acquired after marriage is the common property of both husband and wife. The distribution of the assets upon the death of one spouse varies according to each state's laws.
Compound Interest
When interest is earned on both the principal amount and any interest already earned.
Compounding
When interest is paid on the amount of interest already earned, as well as on principal.
Conservative
Used to describe an investment that is relatively stable and predictable.
Consumer Debt
Debt incurred for consumable or depreciating assets that aren't considered investments. This includes credit card debt, store-financed consumer purchases, car loans, family loans that will be repaid, etc.
Consumer Price Index (CPI)
The most widely accepted indicator of inflation in the United States. The index is based on the aggregate price of a weighted
Contingent Deferred Sales Charge (CDSC)
A deferred sales charge, which is paid at the time of redemption and generally decreases with the amount of time that fund shares are held before sale, ultimately declining to 0%. It is referred to as a contingent sales charge because of such declining schedule. The CDSC is also commonly called a back-end load.
Contract
An agreement between two or more parties to perform or not perform certain actions.
Contract Number
The identification number assigned to the contract by the issuing life insurance company.
Contract Size
The amount of the underlying asset covered by the options contract. This is 100 shares for one stock option contract unless adjusted for a special event, such as a stock split or a stock dividend.
Contract Status
The status of the contract, indicating that the contract is in underwriting/issue, active, or terminated.
Contract Value
The value of the contract on the valuation date before the surrender charges or administrative fees have been deducted.
Conversion Feature
The process of converting a convertible security, such as a bond or preferred stock, into common stock.
Conversion Parity
The price that an investor effectively pays for common stock by purchasing a convertible security, such as a bond or preferred stock, and then exercising the conversion option. Also called Market Conversion Price.
Conversion Premium
The dollar or percentage amount by which the price of a convertible security, such as a bond or preferred stock exceeds the current market value of the common stock into which it could be converted.
Conversion Price
The price, specified when issued, at which a given convertible security, such as a bond or preferred stock, can be converted to common stock.
Conversion Ratio
The number of shares of common stock that could be obtained by converting each share of a convertible security.
Conversion Value
The value of a convertible security if it is converted immediately.
Convertibles
Securities, Usually preferred stock or bonds, that are exchangeable into a predetermined number of shares of common stock at a set price. Convertibles may also be exchanged into other forms of the security, but it is unusual. Convertible securities are usually bought by investors who want higher income than what can be received from common stock combined with a greater potential for appreciation than what can be received from regular bonds. A corporation will issue convertibles to enhance the marketability of their securities.
Corporate Bonds
Debt instruments issued by private corporations.
Corporate Debt Funds A-Rated
Fund invests at least 65% of fund assets in corporate debt issues rated "A" or better or government issues.
Corporate Debt Funds BBB-Rated
Fund invests at least 65% of fund assets in corporate and government debt issues rated in the top four grades.
Corporation
A legal entity formed by one or more persons. A corporation is formed under the laws of a specific state and is legally defined as having a separate existence from that of its founders or owners.
Cost Basis
The price paid for an investment when it was originally purchased.
Coupon
Interest rate on a debt security the issuer promises to pay to the holder until maturity, expressed as an annual percentage of face value. For example, a bond with a 10% coupon will pay $10 per $100 of the face amount per year, usually in installments paid every six months.
Coupon Dates
The dates on which coupons are scheduled to be paid. This day is used to calculate interest due to the holder.
Coupon Frequency
How regularly an issuer pays the coupon to holder.
Cover
Indicates the repurchase of previously sold contracts or shares, known as covering a short position. Short covering is synonymous with liquidating a short position, no longer expecting that stock to drop in value.
Covered Call
Selling a call option contract to open when the account holds the underlying security.
Covered Call Option Writing
A strategy in which one sells call options while simultaneously owning an equivalent position in the underlying security or strategy in which one sells put options and simultaneously is short an equivalent position in the underlying security.
Covered/Uncovered
A covered option contract is backed by the shares underlying the option. An uncovered option contract is not backed by the shares underlying the option. An uncovered option is also called a naked option. A put may be covered when it is backed by sufficient cash to purchase stock upon assignment.
Credit Balance
The amount of money held in your margin account after all trading commitments and other financial obligations have been paid in full.
Credit Score
A number that indicates an individual's credit worthiness. Credit bureaus determine the score with a statistical program.
Cumulative Dividend
A provision requiring that unpaid accumulated preferred stock dividends must be paid before any common stock dividends are.
Cumulative Gain/Loss
Estimated market value of your shares minus your Total Client Investment. Cumulative Gain/Loss is the capital appreciation (depreciation) of all shares, including shares purchased through reinvestment, since their date of purchase in this account. This figure does not include any sales charges or fees you may have already paid or any sales charges, fees or taxes you may be required to pay upon the sale of your shares.
Cumulative Preferred Stock
Preferred stock on which dividends accrue in the event that the issuer does not make timely dividend payments. Most preferred stock is cumulative preferred.
Cumulative Total Return
The increase or decrease in a fund's net asset value from the beginning of a time period until the end of that time period, including dividends or interest payments and capital gains or losses, but excluding sales charges or loads, redemption fees and taxes. Cumulative Total Return is expressed as a percentage and is computed by dividing the change in the fund's net asset value over the specified time period by the fund's net asset value at the beginning of the time period.
Cumulative Voting
A voting system that gives minority shareholders more power, by allowing them to cast all of their board of director votes for a single candidate, as opposed to regular or statutory voting, in which shareholders must vote for a different candidate for each available seat. see also common-law voting, proportional representation.
Currency Fluctuation
Changes in the value of foreign currency compared with the U.S. dollar. This is one of the risks of international investing.
Current Balance
The balance of all transactions entered as of today.
Current Call Date
Represents the current date on which the issuer may redeem part or all of the security, prior to maturity.
Current Qty
The existing number of trading units of a specific security.
Current Ratio
A company's current assets divided by its current liabilities.
Current Trade Date
The existing date an account reflects security sale or purchase transaction. Settlement date for equities is three business days.
Current Yield
Annual dollar coupon interest divided by current market price. Current Yield differs from coupon rate that expresses interest as an annual percentage of face value.
CUSIP Number
A specific nine digit number which identifies all stock and registered bonds, using the Committee on Uniform Securities Identification Procedures (CUSIP). This number also will be listed on trade confirmations.
Custodian
An adult person selected to manage the assets of a minor under either the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. The custodian is responsible for investing and reinvesting a minor's assets prudently and disbursing the assets to the minor, or for the minor's benefit.