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Terms starting with C

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Derivatives, Futures & Options

Cash-Secured Put

Writing a put while setting aside enough cash to buy the underlying if assigned.

Cash to Reserve = Strike x Lot Size; Effective Purchase Price if Assigned = Strike - Premium Received
Indian Market, Regulation & Taxation

CDSL

The Central Depository Services Limited, India's second depository, holding securities in electronic form.

Test: the demat account number is a 16-digit numeric identifier qualitative
Bonds & Fixed Income

Certificate of Deposit

A negotiable short-term deposit receipt issued by a bank at a discount to face value.

Yield = [(Face Value - Price) / Price] x (365 / Days to Maturity) x 100 %
Indicators & Oscillators

Chaikin Money Flow

The sum of volume weighted by close position over n periods, divided by total volume over the same periods.

CMF = Sum of (Money Flow Multiplier x Volume) over n / Sum of Volume over n ratio (x, times)
Indicators & Oscillators

Chandelier Exit

A trailing stop placed a multiple of average true range below the highest high since entry.

Long Exit = Highest High over n periods - Multiplier x ATR; Short Exit = Lowest Low over n periods + Multiplier x ATR
Technical Analysis & Chart Patterns

Channel

A pair of parallel trendlines enclosing price movement, one along the swing highs and one along the swing lows.

Test: an upper and a lower line of equal slope contain the price series over the period examined qualitative
Technical Analysis & Chart Patterns

Chart Timeframe

The period each bar or candle on a chart represents, from one minute to one month.

Test: the timeframe states the duration aggregated into a single plotted period qualitative
Orders, Execution & Market Structure

Circuit Breaker

An automatic trading halt triggered when an index or a security moves beyond a preset percentage from a reference price.

Trigger: index movement of 10%, 15% or 20% from the previous close, with halt duration depending on the level and the time of day %
Bonds & Fixed Income

Clean Price

A bond's quoted price excluding accrued interest.

Clean Price = Dirty Price - Accrued Interest
Orders, Execution & Market Structure

Clearing Corporation

The entity that steps between buyer and seller after a trade, guaranteeing settlement to both sides.

Test: through novation the clearing corporation becomes buyer to every seller and seller to every buyer qualitative
Orders, Execution & Market Structure

Clearing Member

A member of a clearing corporation that settles trades and posts margins, either for itself or on behalf of trading members.

Test: the firm holds clearing membership and is directly liable to the clearing corporation for settlement obligations qualitative
Funds, ETFs & Index Investing

Closet Indexing

An active fund that holds a portfolio close to its benchmark while charging active management fees.

Test: low active share and low tracking error combined with an expense ratio typical of active management qualitative
Market Basics & Instruments

Closing Price

The official end-of-day price of a security, computed in India as the volume-weighted average price of trades in the last thirty minutes.

Closing Price = VWAP of all trades between 15:00 and 15:30
Orders, Execution & Market Structure

Co-location

The practice of placing a trading firm's servers in the exchange's own data centre to minimise the time an order takes to arrive.

Test: the participant's matching-engine access is from within the exchange data centre rather than over a public network qualitative
Derivatives, Futures & Options

Collar

Holding shares while buying a protective put and writing a call, funding the protection with the premium received.

Net Cost = Put Premium - Call Premium; Outcome is bounded between (Put Strike - Net Cost) and (Call Strike - Net Cost)
Bonds & Fixed Income

Commercial Paper

A short-term unsecured promissory note issued by a company at a discount to face value.

Yield = [(Face Value - Price) / Price] x (365 / Days to Maturity) x 100 %
Market Basics & Instruments

Commodity

A standardised raw material or primary product that is traded in interchangeable units, such as gold, crude oil or cotton.

Test: units of the good are fungible against a published quality specification, so one unit is a perfect substitute for another qualitative
Indicators & Oscillators

Commodity Channel Index

An unbounded oscillator measuring how far the typical price sits from its moving average, scaled by mean deviation.

CCI = (Typical Price - SMA of Typical Price) / (0.015 x Mean Deviation), where Typical Price = (High + Low + Close) / 3 ratio (x, times)
Economy, Macro & Market Cycles

Commodity Cycle

The long swing in commodity prices driven by the lag between demand changes and the supply response.

Test: high prices induce investment in new supply, which arrives years later and depresses prices, discouraging investment in turn qualitative
Indian Market, Regulation & Taxation

Commodity Transaction Tax

A tax on the sell side of non-agricultural commodity derivative transactions on recognised exchanges.

CTT = Sell-Side Transaction Value x Applicable Rate %
Fundamental Analysis & Valuation

Comparable Company Analysis

The selection and adjustment of a peer group whose multiples are used to value a target company.

Test: peers share the business model, growth profile, margin structure, capital intensity and regulatory environment of the target qualitative
Fundamental Analysis & Valuation

Compound Annual Growth Rate

The constant annual rate at which a value would have had to grow to move from its starting figure to its ending figure.

CAGR = (Ending Value / Beginning Value) raised to (1 / Number of Years) - 1 %
Risk & Portfolio Management

Concentration Risk

The exposure created when a large share of a portfolio sits in one holding, sector or risk factor.

Test: the largest position, sector or factor exposure is large enough that a normal adverse outcome in it would materially damage the portfolio %
Risk & Portfolio Management

Conditional Value at Risk

The average loss on the occasions when the value-at-risk threshold is exceeded.

CVaR = Average of all losses greater than the VaR threshold