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Call money
Money that is loaned in the call market,
which can be demanded for repayment on call. The term call
money is also known as money at short notice as it is repayable
in 24 hours. It is also traded in the money market.
Capital (or principal)
Initial amount of money invested, excluding
any subsequent earnings.
Capital appreciation
Increase in the value of an asset
such as a stock, bond,
commodity or real estate.
Capital gains/ losses
Net profit or losses from the sale of securities
in the fund’s portfolio. Short-term
gains or losses are generated on securities held one year
or less; long-term gains or losses pertain to securities held
for more than one year.
Capital growth
A rise in the market value of a mutual fund’s
securities shown by it’s net asset value per unit. This is a long-term objective of many
mutual funds.
Certificate of Deposit (CD)
Short-term debt instrument issued by scheduled
commercial banks excluding regional rural banks. They are
unsecured instruments that mature between three months to
one year.
Closed-end fund
A type of fund that has a fixed number of
shares usually listed on a major stock
exchange. Unlike open-end mutual funds, closed-end funds do not stand ready to issue
and redeem shares on a continuous basis.
Price is determined by supply and demand.
Closing price
The price of a security after the
final trade at the end of the day.
Commercial paper
Short-term unsecured instruments issued by
a company that needs to raise money; and is willing to pay
an interest rate. These are included in portfolios of some
mutual funds. Such instruments have
maturities ranging from 3 months to 1 year.
Commission
A fee charged by a broker
or distributor for his or her service in the buying or selling
of securities.
Commodity
A commodity is a product that trades on a
commodity exchange. Examples of these are food, metal or another
physical substance that investors buy and sell, including
foreign currencies, financial instruments and indices.
Compounding
Interest earned not only on the initially
invested principal but also on accumulated
interest during the period.
Consumer Price Index
The index compiled by a governmental agency which tracks
the cost of living by following the change in prices of basic
goods and services over time. This index measures inflation.
Contingent Deferred Sales Charge (CDSC)
A type of exit sales load which is charged when units are redeemed within a specific time period following their purchase.
These charges decline as the holding period increases.
Contrarian
Someone who goes counter to the herd. A
contrarian seeks out-of-favour sectors and may sell when others
buy.
Convertible security
Corporate security (usually preferred
stock or bond) that is exchangeable for another form of security (usually common stock) at
a predetermined price.
Convexity
Convexity is a measure of the way duration
and price change when interest rates change. A bond is said
to have positive convexity if the instrument's value increases
at least as much as duration predicts when rates drop and
decreases less than duration predicts when rates rise.
Coupon
The interest rate on a bond or other
debt security that the issuer
is obliged to pay the holder until it matures. It is usually
given as a percentage of the face value
of the security.
Credit analysis
The process of analysing information on companies
and bonds in order to estimate whether
the issuer will meet with its future obligations to pay out.
Credit rating
A measure indicating the bond
issuer’s credit worthiness, or his/ her ability to repay the
loan. The bonds are rated by an independent rating agency
such as CRISIL, ICRA, and CARE..etc
Credit risk
The potential for an issuer to default
on its obligation to pay interest or principal
on its debt security. Most government securities are considered
to have little, if any credit risk.
Cumulative total return
Usually calculated in the same manner as
standardised average annual total return, except that these
figures represent the total change in value of an investment
over the stated periods and do not reflect any sales
charges.
Current assets
Assets that can be converted to cash within a year.
Current liabilities
Liabilities that must be paid within a year.
Cyclical stocks
Stocks which rise and fall in price with the state
of the economy, in such industries as construction, automobile,
engineering or those affected by the international economy
such as shipping, aviation, and tourism. Cyclical stocks are
also stocks which are affected by the natural environment
such as fertilisers and tea. Examples of non-cyclical stocks
would be drugs, insurance, basic foodstuffs and many other
consumer products.
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