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cable
The London dollar/sterling market. Outdated term occasionally still used by insiders.
capital
Money a company has to invest in buildings, machinery, etc; equity capital is that part of the capital subscribed by sharehold- ers; loan capital is what the company has borrowed; reserves is money that the company has retained from its earnings.
capital adequacy
Measure of the financial strength of a bank or securities firm, usually expressed as a ratio of its capital to its assets. For banks, there is now a worldwide capital adequacy standard, drawn up by the Basle Committee of the Bank for International Settlements. This BIS ratio requires banks to have capital equal to 8 per cent of their assets.
capital gain
Profit made on the sale of shares, commodities or land; In the UK, capital gains tax is payable on the profit.
capital market
Place where long term debt and equity securities can be issued (primary market) and traded (secondary market). Short term debt is issued and traded in the money markets.
cash & equivalents
The sum of cash and short term investments.
cash flow
Pre-tax profit plus depreciation allowances and other charges. In the US the term has a precise accounting definition, net income with depreciation charges added back.
central bank
Most countries have a central bank. Each differs a little from the others in the range of its activities, in the powers and techniques it can use, and in its relationship with its government, but all serve as bank to their country's government and to its banking system. It is through the interplay of these two roles in controlling the cost and availability of money and credit that central banks play a key part in the monetary management of an economy. In addition, many central banks are responsible for the overall stability of their country's financial system. The UK's central bank is the Bank of England. In Germany, it is the Bundesbank and in the US, the Federal Reserve System (the Fed).
certificate of deposit (CD)
Interest-bearing certificate issued by a bank to a large depositor. Especially common in the US.
Chapter 11
In the US a company can file for protection under Chapter 11 of the country's bankruptcy laws. The company continues to operate under existing management while working with its creditors to reorganise the business. There are different Chapters, with different implications. A Chapter 7 bankruptcy, for example, leads to a company's liquidation.
churning
Occurs when sales agents urge a client to engage in a rapid and sustained buying and selling of investments. It is a lucrative practice because agents earn commission on each transaction. It is also often illegal.
City, the
Financial district of London, traditionally concentrated in the City of London, or Square Mile; the UK equivalent of Wall Street; used as a synonym for UK financial markets.
clearing bank
Member bank of a national cheque clearing system. In the UK, the clearing banks include the leading English 'high-street' banks, their Scottish and Northern Irish equivalents and several regional banks.
clearing house interbank payment system (Chips)
Computerised payment system for clearing cheques in New York.
clearing house automated payment system (Chaps)
Computerised payment system for clearing cheques in the UK.
closed-end investment funds
Investment funds with a fixed share capital. Open-ended funds grow or shrink according to investor demand.
common equity
Represents common shareholders’ investment in a company. Includes common stock value, retained earnings, capital surplus, capital stock premium, etc
common stock
see ordinary shares.
commercial paper
Short-term securities (typically 90 days in maturity) issued by companies to raise working capital.
compulsory liquidation
liquidation of a company brought about by a court order, usually as the result of a petition by an unpaid creditor.
consensus forecasts
The average of stockbrokers' and bank analysts’ forecasts of the future financial performance of a company. FT.com provides those compiled by Barra's Global Estimates.
consortium bank
Bank jointly owned by a number of other banks.
consumer price index (CPI)
Measure of the change in the cost of consumer goods and services. It is used as an indicator of a nation's inflation rate.
contango
When prices for future delivery in a commodities market are higher than those for cash or spot transactions. The gap between a cash price and a forward quotation is often based on current interest rates plus storage and insurance costs to cover the cost of holding the commodity for the relevant period. The opposite is backwardation.
convertible bond
Bond that can be converted into shares of the issuing company or its parent.
convertible currency
Currency whose monetary authority allows holders to switch freely into other currencies or gold.
correlation
Movement in the same direction at the same time
coupon
A small certificate which is detachable from a bond to be exchanged for dividends, interest payments, etc. Also used to mean the rate of interest payable on a fixed-interest security.
credit ratings
see debt ratings
cross rate
Exchange rate between two currencies other than those that form a market's principal rates. Thus, in London, the yen/dollar rate is a cross rate.
cum
see ex
currency codes
FT.com uses the three letter currency codes of the International Standard Organisation, (ISO). Click here for a full list.
currency swap
Two parties exchange specific amounts of two different currencies and repay over time, payments being based on fixed interest rates in each currency.
current assets
Total current assets, representing cash and other assets that are reasonably expected to be realised in cash, sold or consumed within one year or one operating cycle. Generally it is the sum of cash and equivalents, receivables, inventories, prepaid expenses and other current assets.
current cost accounting
System designed to adjust accounting for changes in prices that affect a company’s assets. The more usual convention is historic cost accounting.
current liabilities
Total current liabilities represent debtor or other obligations that the company expects to satisfy within one year. It includes accounts payable, short term debt, notes payable, current portions of long term debt, income taxes payable, dividends payable and other current liabilities.
current ratio
Measurement of a company's liquidity, calculated by dividing the business's total current assets by total current liabilities. See also acid test.
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