Qualified advisers answering your
Financial Questions
call 0800 092 1245

Glossary Of Investment Terms (C)

The following are useful investment terms beginning with ‘C’

Call Option
A call option is an option which gives the holder the right (but not the obligation) to purchase an asset at a predetermined date (maturity date) for a predetermined price (exercise price). See also Put Option.

Cancellation Period
The period after signing a contract during which the investor is entitled to cancel the agreement and receive their money back without penalty (only applicable for some financial products). For single payments they might get back less if the value has fallen.

A cap is a ceiling or maximum rate of interest under a loan agreement.

The funds used to acquire any type of savings or investment product.

Capital Asset Pricing Model (CAPM)
Sophisticated mathematical model of the relationship between expected risk and expected return. The model is grounded in the theory that investors demand higher returns for higher risks, and lower risk often equates to a lower expected return.

Capital Charge
When an investment manager takes the management charges out of the fund's capital instead of the income (not all funds produce an income).

Capital Gains Tax
Capital Gains Tax is the tax which you pay on any capital gains you make after taking into account various allowances and exemptions. These rules and regulations change on a regular basis and professional advice should be taken each year.

Capital Growth/Gain
This is the increase in the original amount of capital invested.

Capital Guaranteed
Referring to an investment product, normally offered by a life insurance company, which includes some form of guaranteed return of capital.

Often referred to in the context of companies on the stock market, this is the value of all shares in existence for any one company, i.e. the market capitalisation of the company.

Capital Markets
A generic term for investment markets.

Capital Protected
Referring to a type of investment portfolio which is managed in such a way as to reduce or eliminate the risk of capital losses, usually through the use of quantitative techniques such as protection overlays. See also Capital Guaranteed.

Abbreviation for Capital Asset Pricing Model.

One of the asset classes invested in as part of a typical balanced investment portfolio.

Cash Equivalents
Short-term investments held in lieu of cash and readily converted into cash within a short time span (i.e. bank bills, Treasury Notes etc), generally with maturities of no longer than 180 days.

Cash-in Value
The amount you might get if you cash in an investment.

CAT Standards
CAT stands for Charges, Access, and Terms. CAT standards were introduced by the Government on ISAs in order to help consumers choose financial products. However it is important to remember that CAT standards are not a Government guarantee and that they are not necessarily the best option for an individual consumer.

Certificate of Deposit
A written certificate by a bank or financial institution stating that a fixed amount has been deposited with it, for a fixed period of time at a predetermined rate of interest.

A document showing details of units held within a Unit Trust, Shares or Bonds.

A chartist is a technical analyst who charts the patterns of stocks, bonds and commodities making forecasts about their short, medium and longer term direction. Chartists believe recurring patterns of trading can help them forecast future price movements. See also Technical Analysis.

Closed End Fund
A pooled 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 or redeem shares on a continuous basis.

Closed funds
Funds which are no longer accepting new investors, although the fund is still invested and managed in the usual manner.

Referring to a loan facility in which both maximum and minimum interest rates are specified. The maximum acts as a cap while the minimum rate is a floor below which the interest rate will not be allowed to fall.

Collective Investments
These are funds which take finances from a number of private investors and pool them together in one fund. This method of investment enables investors to gain exposure to a larger number of investments than would otherwise be the case, and therefore spreads their risk. Examples are: Unit Trusts and OEICS.

A tradable item that can generally be further processed and sold; for example metals, wheat, sugar, coal etc.

Money paid by an insurance company to a middle man (e.g. a financial adviser or direct agent) for selling a product.

Procedures undertaken at regular intervals or on an on-going basis to ensure internal and external controls and regulations are complied with.

Compound Interest
This is the cumulative effect of earning interest on your savings and leaving your interest in the savings account (e.g. interest on capital and interest on interest).

Compulsory Purchase Annuity
An annuity which must be purchased on retirement for a member of an insured pension scheme.

An agreement between two or more parties that is legally enforceable.

Contract Note
A contract note is evidence that you've bought or sold shares or funds. It is an important legal document given that certificates are rarely physically issued these days.

Contracted Out/In
A pension scheme is contracted out when it provides benefits in place of State Second Pension. You can contract out if you are in an Occupational Pension Scheme that is contracted out, or have elected to contract out via a Personal Pension Plan, Stakeholder Pension Plan or FSAVC scheme. Pension regulations change on a regular basis and advice should always be taken before making any changes to your pension arrangements.

Contracting Out of State Second Pension
Redirecting some or all National Insurance contributions that fund a State Second Pension into another pension scheme. Pension regulations change on a regular basis and advice should always be taken before making any changes to your pension arrangements.

An amount of money placed into an investment fund of some type. In relation to pension funds, contributions may be made by either employers or employees or both.

Contributory Pension
An occupational pension scheme where the employee contributes a proportion of their salary in addition to a contribution made by the employer.

Controlling Director
This is a director who owns or controls 20% or more of the voting capital of a company either directly or indirectly. This 20% includes shares held by the director's family and associates.

Core Funds
Core funds are often considered the essential building blocks or cornerstones of a portfolio because these funds take a "middle of the road" approach to generating returns for shareholders. Core funds are focused on producing solid long-term results while attempting to manage risk

Corporate Governance
A generic term covering issues associated with the management practice, Board structures and personnel policies of companies.

Corporation Tax
Tax paid by companies on trading profits and capital gains.

The interest rate applied to the value of a Corporate Bond or Gilt.

Cover Note
A temporary document that can be used as evidence of insurance cover, while the actual policy and insurance certificate are being prepared.

Credit Risk
The risk of suffering loss due to another party defaulting on its financial obligations.

Credit Scoring
This is a test of an individual's financial status. Points are awarded on a range of criteria that include income, home ownership, debts and repayment history.

Critical Illness Insurance
An insurance policy that pays out a capital sum if the Life Assured is diagnosed as suffering from certain critical illnesses.

Cum Dividend
This refers to a share which is trading such that buyers rather than sellers qualify to receive the next dividend payment.

Cumulative performance
The performance of a fund's price over a given period of time.

Currency Overlay
An investment management technique aimed at protecting an investor's overseas currency exposure by means of a dynamic hedging model.

Currency Risk
Risk of incurring losses in relation to the value of overseas investments as a result of movements in international exchange rates. This is where you could make an investment gain in the local overseas currency but when converting into your own currency this may result in a loss.

A bank or other financial institution that keeps custody of stock certificates and other assets on behalf of clients.

Custodial Charges
Charges made by banks and other financial institutions for retaining stock certificates and other assets on behalf of clients.

The retention of securities by a financial institution on behalf of others, for the purposes of safekeeping.

Cyclical Stocks
Shares which move directly with the business cycle; generally they advance as business conditions improve and decline when business slackens (counter-cyclical stocks move in the opposite direction to the general business cycle)

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:

Latest News


Helpful new tax year facts that could affect you and your money

Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.

Read more

Useful Links

Popular Searches

Please Enter More Details

Enter More Details