C

Question 1

Calendar Anomaly

Answer 1

An irregular securities pattern that emerges
during certain times of the year, such as the
January Effect.

Question 2

Call date

Answer 2

A day on which the issuer of a debt security
or preferred share may choose to buy back
the security in full or in part. See also Call
feature, Call price, and Callable bond.

Question 3

Call feature

Answer 3

A clause of many debt securities and
preferred shares whereby the borrower has
the right to buy back all or a portion of the
security at specified times before the final © CSI GLOBAL EDUCATION INC. (2012)
GLOSSARY G•5
maturity date. A standard call feature
includes a schedule of the dates and prices
at which a borrower can buy back the issue.
See also Call date, Call price, and Callable
bond.

Question 4

Call price

Answer 4

The price at which the issuer of a debt
security or preferred share can redeem the
security. See also Call date, Call feature,
Callable bond, and Canada yield call.

Question 5

Callable bond

Answer 5

A debt security with a call feature. See also

Call date, Call feature, and Call price

Question 6

Canada yield call

Answer 6

A callable bond with a call price based on
the greater of (a) par or (b) the price based
on the yield of an equivalent-term
Government of Canada bond plus a
specified yield spread. Also known as a
Doomsday call. Sell also Call price and
Callable bond.

Question 7

Candlestick chart

Answer 7

A type of chart that records the open, high,
low, and closing price for each period
(which can be a minute, hour, day, week,
month, etc.). The candlestick chart differs
from a bar chart in that the candlestick for
each period has a real body, which is a box
that visually represents the difference
between the period’s opening and closing
prices. When the closing price is higher
than the opening price, the real body is
white or empty; when the closing price is
lower than the opening price, the real body
is black or filled in. See also Bar chart, Line
chart, and Real body

Question 8

Capacity constraints

Answer 8

Limits on the availability of trading
opportunities consistent with the manager’s
strategy and risk/return expectations.

Question 9

Capital Asset Pricing Model

CAPM

Answer 9

A theory that describes the relationship
between the expected return and risk on
any asset. The CAPM asserts that the only
for which investors can expect to be
compensated is systematic or market risk,
because it cannot be eliminated by
diversification. See also Systematic risk
and Unsystematic risk.

Question 10

Capital gain

Answer 10

Selling a security for more than its purchase

price.

Question 11

Capital securities

Answer 11

Subordinated debentures that rank below
all other indebtedness of the issuer, but
above that of all equity stakeholders. See
also Capital trust security and Preferred
security

Question 12

Capital trust security

Answer 12

A type of capital security that resembles a
bond issue because it has $1,000 par values
and is traded in the bond market. See also
Capital securities and Preferred securities

Question 13

Capture ratio

Answer 13

The relative proportion of after-tax return

to pre-tax return.

Question 14

Cash flow yield

Answer 14

The internal rate of return on a portfolio
of debt securities. See also Internal rate
of return.

Question 15

Client profile

Answer 15

A document containing information
about a client that can be used to create
an appropriate investment policy. This
includes information about the client’s
personal and financial situation, goals and
objectives, personality, attitude toward
investing, experience with investing,
willingness to bear risk, and more. See also
Investment policy

Question 16

Client questionnaire

Answer 16

A series of multiple-choice or open-ended
questions designed to acquire information
from a client. Some questionnaires have a
scoring key to help interpret responses to
the multiple-choice questions

Question 17

Closed-end fund

Answer 17

An actively managed fund that initially
raises capital by selling units to investors,
after which additional units are rarely
issued. Once issued, the units are listed
for trading on a stock exchange.

Question 18

Closed-ended questions

Answer 18

Questions that seek specific pieces of

information.

Question 19

Closed mortgage-backed security

Answer 19

Closed mortgage-backed security

Question 20

Coefficient of determination

Answer 20

The percentage of the variability in the 
dependent variable (as measured by 
variance) that can be explained by the 
variability in the independent variable. See 
also Dependent variable and Independent 
variable.

Question 21

Cognitive bias

Answer 21

Basic statistical, information processing or
memory errors that are common to all
human beings.

Question 22

Collars

Answer 22

The purchase of an out-of-the-money put

while simultaneously writing an out-of-the money call

Question 23

Collateralized mortgage obligation

CMO

Answer 23

A mortgage-backed bond that separates
mortgage pools into staggered maturity
groups (tranches) that reallocate the interest
and principal payments. Each tranche is
sold as a separate security and has a
different claim on the underlying cash flow.

Question 24

Commercial Mortgage-Backed

Security (CMBS)

Answer 24

A mortgage-backed security backed by a
pool of commercial mortgages. See also
Mortgage- backed security.

Question 25

Commercial paper

Answer 25

An unsecured money market security issued
by a corporation, or in asset-backed security
form, backed by a pool of underlying
financial assets.

Question 26

Commodity pools

Answer 26

Managed futures funds that are structured
and sold as mutual funds. Managed futures
funds actively trade derivatives products as
well as physical commodities, financial
assets, and currencies

Question 27

Commodity Trading Manager

Answer 27

A Canadian-based discretionary futures

advisor.

Question 28

Common shares

Answer 28

Securities issued by a corporation that
represent ownership interest in the
corporation. Common shareholders have
voting rights and a claim on the company’s
residual earnings and assets, and may be
entitled to receive dividends, if declared by
the company’s Board of Directors

Question 29

Company analyst

Answer 29

See Equity analyst.

Question 30

Competitive tender basis

Answer 30

A type of bid in an auction of debt 
securities (particularly Government of 
Canada fixed- coupon marketable bonds) 
in which the amount won at the auction is 
based on the bids submitted, which are 
accepted in rising order of yield until the 
full amount of the auction has been 
allocated. See also Non-competitive 
tender basis.

Question 31

Compound interest

Answer 31

Interest paid on principal and previously

earned interest.

Question 32

Composite market indices

Answer 32

Indices designed to measure the movements
of specified markets, not benchmark
performance.

Question 33

Conference Board Consumer

Confidence Index

Answer 33

A monthly nationwide survey of U.S.
consumer confidence released by the
Conference Board.

Question 34

Consensus earning forecast

Answer 34

The average of a group of analysts’ earnings

forecasts. See also Earnings forecast.

Question 35

Consensus forecast

Answer 35

An average forecast of several economists or

analysts.

Question 36

Consolidation

Answer 36

See Continuation pattern

Question 37

Continuation pattern

Answer 37

A chart formation that helps if a previous
trend (which has ended) is likely to resume
after a period of consolidation. Also known
as a consolidation. See also Trend

Question 38

Contrarian indicator

Answer 38

An indicator that suggests buying a stock
when most investors are bearish, and selling
a stock when most investors are bullish. See
also Public short ratio and Put/call ratio.

Question 39

Convertible arbitrage hedge fund

Answer 39

A hedge fund designed to identify and
exploit mispricings between convertible
securities (convertible bonds or preferred
shares) and the underlying common stock.
See also Hedge fund.

Question 40

Convertible bond

Answer 40

A debt security that is exchangeable into
common shares of the issuer at the option
of the holder. See also Exchangeable bond

Question 41

Convexity

Answer 41

A measure of the rate of change in modified
duration as yields change. A much closer
estimate of the actual percentage change in
the price of a bond is the sum of the bond’s
modified duration and convexity for a given
change in yield. For option-free bonds,
convexity is always positive. For bonds with
embedded options, convexity can be
negative. See also Modified duration,
Negative convexity, and Positive convexity.

Question 42

Correlation coefficient

Answer 42

A standardized measure of the tendency of
two variables to move in the same direction
(relative to their average or expected values)
at the same time. The correlation coefficient
is equal to the covariance divided by the
product of the two variables’ standard
deviation. Unlike the covariance, the
correlation coefficient measures both the
direction and strength of the liner
relationship.

Question 43

Corridor

Answer 43

The percentage around which an asset class 
is allowed to vary from its strategic weight 
before it is rebalanced back. The corridor is 
also known as the Tolerance band

Question 44

Counter cyclical indicator

Answer 44

An indicator or variable that tends to move
in the opposite direction of the economic
cycle. See also Pro cyclical trend

Question 45

Coupon payment

Answer 45

The periodic payment of interest on a debt

security

Question 46

Coverage universe

Answer 46

The companies covered by a particular

equity analyst. See also Equity analyst.

Question 47

CPI ex-8 index

Answer 47

A variant of the Consumer Price Index
(CPI) that excludes the eight components
with the most volatile prices – fruit,
vegetables, gasoline, fuel oil, natural gas,
mortgage interest, intercity transportation,
and tobacco products, as well as the effect
of changes in indirect taxes on the
remaining CPI components. Also known as
Core CPI. See also Consumer Price
Index

Question 48

Creation units

Answer 48

The large share blocks in which ETFs are
issued. Usually a creation unit is a block of
50,000 ETF shares that track the index.
Investors, known as authorized
participants, do not purchase creation
units with cash. Instead, they exchange, on
an in-kind basis, baskets of securities that
mirror the index to acquire the units

Question 49

Credit analysis

Answer 49

An evaluation of a debt security issuer’s
ability to service and repay its debt. The
evaluation typically includes: determining
the issuer’s existing obligations and the
assets that are available as protection for
debt holders in the event of a default;
analyzing liquidity and borrowing needs;
and analyzing cash flow needs. See also
Credit rating and Default risk.

Question 50

Credit rating

Answer 50

A credit rating agency’s opinion of the
general credit-worthiness of an issuer with
respect to a debt security or other financial
obligation, based on relevant risk factors.

Question 51

Credit risk

Answer 51

The risk that an issuer of a debt security
may be unable to make timely principal
and interest payments. More accurately
termed Default risk.

Question 52

Credit spread

Answer 52

The portion of a debt security’s yield spread
attributable to the difference in credit risk.
See also Credit risk and Yield spread.

Question 53

Crystallization

Answer 53

Is similar to tax-loss harvesting but takes
the process one step further. After the offset
trades are executed, more of the security in
the gain position is purchased. See also
tax-loss harvesting.

Question 54

Cushion

Answer 54

The difference between the investment in
the underlying asset and the value of the
zero-coupon bond needed to meet the
principal guarantee in a PPN structure

Question 55

Cyclical growth industry

Answer 55

An industry that shares attributes of both a
cyclical and growth industry. The industry
tends to have long-term growth prospects
that vary with the economic cycle. See also
Cyclical industry and Growth industry

Question 56

Cyclical industry

Answer 56

An industry with a growth pattern similar
to that of the economic cycle. As such, the
industry tends to suffer during recessions,
but grow during periods of economic
prosperity.

Question 57

Cyclical trend

Answer 57

A trend following a recurring pattern with
four basic components: expansion, peak,
contraction, and recession

Question 58

A trend following a recurring pattern with
four basic components: expansion, peak,
contraction, and recession

Answer 58

An approach to tactical asset allocation that
involves monitoring economic activity,
looking for patterns that have historically
led to stock market movements.