C Flashcards
Calendar Anomaly
An irregular securities pattern that emerges
during certain times of the year, such as the
January Effect.
Call date
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.
Call feature
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.
Call price
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.
Callable bond
A debt security with a call feature. See also
Call date, Call feature, and Call price
Canada yield call
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.
Candlestick chart
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
Capacity constraints
Limits on the availability of trading
opportunities consistent with the manager’s
strategy and risk/return expectations.
Capital Asset Pricing Model
CAPM
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.
Capital gain
Selling a security for more than its purchase
price.
Capital securities
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
Capital trust security
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
Capture ratio
The relative proportion of after-tax return
to pre-tax return.
Cash flow yield
The internal rate of return on a portfolio
of debt securities. See also Internal rate
of return.
Client profile
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
Client questionnaire
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
Closed-end fund
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.
Closed-ended questions
Questions that seek specific pieces of
information.
Closed mortgage-backed security
Closed mortgage-backed security
Coefficient of determination
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.
Cognitive bias
Basic statistical, information processing or
memory errors that are common to all
human beings.
Collars
The purchase of an out-of-the-money put
while simultaneously writing an out-of-the money call
Collateralized mortgage obligation
CMO
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.
Commercial Mortgage-Backed
Security (CMBS)
A mortgage-backed security backed by a
pool of commercial mortgages. See also
Mortgage- backed security.
