Finance Dictionary ( daily finance terms and concepts will be added and discussed)

Capital Gain

An increase in the value of a capital asset such as common stock. If the asset is sold, the gain is a “realized” capital gain. A capital gain may be short-term (if the security is held one year or less) or long-term (if the security is held more than one year).
 
Cash Account

An account in which the customer is required by the SEC’s Regulation T to pay in full for securities purchased not later than two days after the standard payment period set by the NASD’s Uniform Practice Code.
 
Cash and Cash Equivalents

A section of a company’s Balance Sheet reports the value of Cash and Cash Equivalents. These are assets that are cash or can be converted into cash immediately, such as bank accounts, marketable securities, and Treasury Bills.
 
Cash Dividend

Money paid to a corporation’s stockholders, normally out of the corporation’s current earnings or accumulated profits. All dividends must be declared by the board of directors. Dividends are taxable as income to the shareholders.
 
Cash Flow

Also known as Cash Flow Per Share. The amount of cash a company generates during a period, calculated by adding noncash charges -- such as depreciation -- to net income after taxes. Cash Flow per Share is calculated by dividing the Cash Flow by the number of outstanding shares, and is sometimes used in lieu of Earnings per Share in analyzing a company. Cash Flow can be used as an indication of a company’s financial strength. A company pays dividends from this cash amount. Some analysts consider this figure more meaningful than net income because it is the actual amount of money generated by the company.
 
Chicago Board of Trade

Abbreviated CBOT. The oldest commodity exchange in the United States; established in 1886. The exchange lists agricultural commodity futures such as corn, oats, and soybeans, in addition to more recent innovations such as GNMA mortgages and the NASDAQ 100 Index.
 
Chinese Wall

A descriptive name for the division within a brokerage firm that prevents insider information from passing from corporate advisers to investment traders, who could use the information to reap illicit profits.
 
Churning

An unethical practice employed by some brokers to increase their commissions by excessively trading in a client’s account. This practice violates the NASD Rules of Fair
Practice.
 
Close

(1) The price of the last transaction for a particular security on a particular day. (2) The midprice of a closing trading range.
 
Common Dividends

Newer companies growing rapidly may pay no or only a modest dividend, preferring to reinvest their profits in order to grow the business. More established companies often pay a dividend quarterly.
 
Common Equity

The ownership of the company may be held by two classes of shareholders, preferred and common. The stock held by the second group is called the common equity of the company. Common equity is useful in measuring the performance of a company’s management.
 
Compound Annual Growth Rate

Measures the rate of change of a value over a one year period.


Compounding

The ability of an asset to generate earnings that are then reinvested and generate their own earnings; making earnings off earnings.
 
Conference Call


A publicly-traded company’s communication with Analysts, Shareholders, and investors by telephone and/or via the Internet.
 
Confirmation


The written acknowledgement provided by a Broker that a trade has been completed. It includes details such as the date, price, commission, fees, settlement terms, and so on.
 
Consolidated Financial Statements

A presentation of the financial position of a parent company and its subsidiaries as one entity in a financial statement.
 
Continuing Operations

A term used in an Income Statement to label income of a recurring nature, rather than that caused by sales of assets or discontinued operations.
 
Corporate Bond

A Debt Security issued by a corporation. A corporate bond typically has a par value of $1,000, is taxable, has a term maturity, and is traded on a major exchange.
 
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