CUSIP
Committee on Uniform Securities Identification Procedures

Call (Option)
An option that permits the owner to buy a contracted amount of underlying security at a set price (strike or exercise) for a predetermined period of time (up to the expiration date).

Call Date
The date on which and after which selected issues of Treasury bonds can be redeemed before maturity.

Call Protection
The degree of security that an investor has against a bond being redeemed. Practically, the number of years between today and the call date.

Call Risk
The possibility that bonds will be re-paid (or "called") prior to maturity. This possibility increases during periods of falling interest rates.

Call Spread
Client buys a call and sells a call on the same security but with different expiration dates, different exercise prices, or both.

Callable
A securities feature that allows the issuer to retire the issue when desired. Should the issue be called, the issuer usually pays a premium.

Callable Bonds
Treasury bonds that can be redeemed by Uncle Sam five years before maturity.

Capital
Money.

Capital Appreciation
The profit made on an investment, measured by the increase in a fund share's value from the time of purchase to the time of sale.

Capital Appreciation Funds
A fund that invests primarily in common stocks the manager believes will provide maximum capital appreciation. Capital appreciation funds often resort to aggressive investment techniques, such as rapid portfolio turnover, leveraging, and investing in unregistered securities in order to achieve their objectives.

Capital Gain
The difference between the adjusted cost of an asset and the selling price when the difference is positive. Capital gains tax is normally due on the sale of an appreciated asset.

Capital Gain
A trading profit. Trading gains that occur in one year or less are short-term capital gains; those that occur in periods longer than one year are long-term capital gains. Short-term and long-term capital gains are treated differently for tax purposes.

Capital Gain Distributions
A distribution to shareholders of profits realized from the sale of securities in a fund's portfolio. Capital gain distributions are usually paid yearly, and are currently taxable at a rate up to 28%.

Capital Growth
Also called capital appreciation, capital growth is an investment objective of many stock funds. Capital growth is achieved when the market values of a fund's holdings increase, causing the fund's net asset value per share to increase.

Capital Loss
A trading loss. Losses are long- or short-term as are gains. See Capital Gain.

Capital Reserve Fund
Money that is earmarked for a long-term purpose requiring the accumulation of capital. For example, money can be kept in a reserve fund to pay for possible risks that cannot be covered by insurance.

Capital Stock
The common and preferred stock of a company.

Capitalization
The total dollar value of all common stock, preferred stock, and bonds issued by a corporation.

Cash Account
A customer account in which all securities purchased must be paid for in full.

Cash Dividend
Dividends that corporations pay on a per-share basis to stockholders from their earnings.

Cash Flow
Amount of total payments, interest and occasionally principal received as current income from Treasury and agency securities.

Cash Reserve
Money that is readily available to meet expenses that were not planned for in a budget. Commonly, the suggested level of cash reserve equals three to six months of cash uses. But the size of a cash reserve can vary based on family income, job stability, current level of debt, number of income earners, amount of insurance deductibles and risk tolerance.

Cash Transaction
A settlement on the same day as the trade date.

Cashiering Department
Brokerage firm department that is responsible for receiving and delivering securities and money to and from other firms and clients.

Certificate
1) The physical document evidencing ownership (a share of stock) or debt (a bond). 2) An investment available from a financial institution that pays a fixed rate of return for a specified period of time.

Certificate Of Deposit (CD)
A negotiable certificate that evidences a time deposit of funds with a bank.

Charitable Gift
Money or property given to qualified charitable organizations. Individuals may give an unlimited amount to qualified charitable organizations free of federal gift and estate taxes. (Some limitations apply to charitable deductions for federal income tax purposes.)

Charitable Lead Trust
An irrevocable trust that provides income to a charity for a set number of years or for a person's lifetime. After the income interest ends, the trust assets are returned to the donor or the donor's designated heirs. This type of trust may reduce estate taxes and allow the heirs to retain control of the assets.

Charitable Remainder Trust
An irrevocable trust that provides income to the donor or to a named beneficiary for a set number of years or for a person's lifetime. After the income interest ends, the trust assets pass to the charity. Generally, the portion of the trust assets representing the charitable gift provides both income and estate tax charitable deductions. If the property placed in the trust was an appreciated capital asset, capital gains tax may be avoided.

Class
Options of the same type - all calls or all puts on the same security.

Classes of Shares
Various classes of a single portfolio are distinguished by the type of sales charge they levy. In general: -- Class A shares carry a front-end load. -- Class B shares carry a back-end load (also known as a contingent deferred sales charge). -- Class C shares carry an ongoing charge (usually in the form of an annual 12b-1 charge).

Clearing Corporations
A central reception and distribution center operated for its members who are made up of various brokerage firms. Many offer automated systems that expedite comparison procedures. Among these are NSCC (National Securities Clearing Corp.) and OCC (Options Clearing Corporation).

Clearing House Comparison (CHC)
A form used to submit trades to NSCC that have missed the normal entry methods. Such trades enter the system on the third business day of the trade cycle.

Cliffing
A strategy for arranging bonds so that they all mature in the same year.

Clone Fund
A fund launched to mirror a closed fund. For example, fund managers may decide to close a fund that has grown so large it is no longer able to establish positions in smaller securities. They could then launch a new fund in the closed fund's image. While both funds would have the same investment objective, they would generally be run by different managers and would invest in different securities.

Close
Price of the last transaction of a security on a particular trading day.

Closed End Fund
A fund whose offering of shares is closed. That is, once the initial offering is completed, the fund stops offering its shares. The value of the shares is then determined by supply and demand, rather than by calculation of net asset value.

Closed to New Investors
Occasionally a manager may declare a fund "closed to new investors" which means that no new investments will be accepted. This is often a temporary designation, prompted by a tremendous amount of money invested in the fund in a short period of time. The portfolio manager may be concerned about finding enough appropriate securities to add to the fund's portfolio.

Closing Transaction
The transaction executed to close an option contract. The holder would sell to close while the writer would buy to close.

Co-Partnership Account
An account in which the individuals may act on behalf of the partnership as a whole.

Codicil
A supplement or addition to a will that may explain, modify, qualify or alter provisions in an existing will. The same formalities, requiring signatures by witnesses, must be observed as in creating a new will.

Collateral
An asset pledged to support a loan.

Collateral Trust Bond
A debt instrument issued by one corporation and backed by the securities of another corporation.

Collateralized Mortgage Obligation (CMO)
A security collateralized with mortgages or mortgage-backed securities. Many CMOs backed by a U.S. government agency are rated AAA. Non-agency CMOs may be lower rated.

Combination
A position long or short different types of options on the same stock with different strike prices and/or expiration dates.

Combination Order
In listed options trading, an order to simultaneously buy a call and sell a put or to buy a put and sell a call on the same underlying security. Also called a Combo Order.

Commercial Paper
A short-term debt instrument issued by an established corporation to meet short term financing needs. Such instruments are unsecured and have maturities ranging from 2 to 270 days. Its rate of interest is set at issuance and can be realized only if held to maturity.

Commission
A fee imposed when funds are bought or sold to compensate the broker for his or her role in the transaction.

Commission House Broker
A floor broker who is employed by a brokerage house to execute orders on the exchange floor for the firm and its customers.

Committed Expenses
Living expenses that are necessary to maintain your lifestyle including housing, food, clothing, transportation, education and insurance.

Common Stock
A security, issued in shares, that represents ownership of a corporation. Common stockholders may vote for the management and receive dividends after all other obligations of the corporation are satisfied.

Common Stock Fund
A fund that invests primarily in common stocks. The investment objectives of common stock funds may vary greatly.

Community Property
Property acquired during a marriage and considered to be owned equally by husband and wife under the laws of a state providing for such ownership.

Comparison
The process by which two contra brokerage firms in a trade agree to the terms of the transaction. Comparison can be either through a clearing corporation or on a trade-for-trade basis (that is, ex the clearing corporation).

Competitive Tender
A method of purchasing new issues of Treasury bills, notes, and bonds in which the investor specifies the yield, and accordingly the price, he or she requires to purchase the security.

Compound Interest
Interest that is computed on the principal and on the interest accrued during the preceding period. Compound interest may be computed daily, monthly, quarterly, semiannually or annually.

Compounding
Interest earned on interest previously earned and reinvested. For example, if a security paid a fixed interest rate of 10% annually and an investor invested $500, by the end of the first year the investor would have earned $50 in interest. If that interest was reinvested, the investor would enter the second year with $550 invested. At the end of the second year, the investor would have earned $55 in interestearning an extra $5 in interest thanks to the reinvestment of the first year's interest.

Confirmation
A trade notice, issued to customers of brokerage firms, that serves as written notice of the trade, giving price, security description, settlement money, trade and settlement dates, plus other pertinent information.

Consent To Loan Agreement
An agreement margin customers must sign to authorize the brokerage firm to lend the customer's securities to itself or other firms.

Conservative Risk Tolerance
The capacity to invest for a low expected rate of return in exchange for increased assurances of maintaining a stable principal and maintaining the expected rate of return. See Risk tolerance.

Consideration
The money value of a transaction (number of shares multiplied by the price) before adding commission.

Constant-Dollar Investment
Securities such as savings accounts and money market funds that do not fluctuate in price.

Consumer Liability
A debt on which the interest payments are not deductible for income tax purposes, such as credit cards and auto loans.

Contingent Deferred Sales Charge (CDSC)
A type of back end load sales charge, a contingent deferred sales charge is a fee charged when shares are redeemed within a specific period following their purchase. These charges are usually assessed on a sliding scale, with the fee reduced each year the shares are held.

Contingent deferred sales charge (CDSC)
A type of back end load sales charge, a contingent deferred sales charge is a fee charged when shares are redeemed within a specific period following their purchase. These charges are usually assessed on a sliding scale, with the fee reduced each year the shares are held.

Contractual Plan
A program in which a legal vehicle (plan company or participating unit investment trust) agrees to invest a fixed amount in a fund at regular intervals for 10 or 15 years. In exchange, investors in these plans commonly receive other benefits, such as decreasing term life insurance.

Control Persons
A director, officer or other affiliate of the issuer or a stockholder who owns at least 10% of any class of outstanding stock.

Control Securities
Securities owned by one of those parties mentioned in Control Person

Convertible Issue (Bond)
A securities feature that permits the issue holder to convert to another issue, usually common stock. This privilege can be used only once. The preferred stock or bond holder can convert from that issue to another, but not back.

Convertible Preferred Stock
A preferred stock that may be converted into common stock of the same company at specific prices or rates.

Convertible Securities Funds
A fund that invests primarily in convertible bonds and/or convertible preferred stocks.

Convertible Security
Corporate securities (usually preferred shares or stock or bonds) that are exchangeable for a set number of another form of security (usually common stock) at a prestated price.

Convertible Zero
As it applies to the Treasury sector, a stripped Treasury zero that converts into a current income obligation five years before maturity.

Cooling-Off Period
The period, usually 20 days, between the filing of the registration statement on a new issue with the SEC and the effective date of the offering.

Corporate Bond Funds
A fund that invests primarily in corporate bonds. In general, corporate bond funds seek income over capital growth.

Corporate Resolution
A document stating that the corporation's board of directors has authorized a particular individual to act on behalf of the corporation. This document is necessary when the corporation opens a cash or margin account.

Corporation
A business organization under the law with certain rights and responsibilities in which the worth is divided into shares of stock.

Country Funds
A fund that invests primarily in the securities of a single country. In some cases, country funds also invest in securities outside the single country if those securities are expected to benefit by growth in that country.

Country Risk
The potential for price fluctuations in stocks sold in foreign countries due to events (political, financial, etc.) in these countries.

Coupon
(1) On Bearer Stocks, the detachable part of the certificate exchangeable for dividends. (2) Denotes the rate of interest on a fixed interest security - a 10% coupon pays interest of 10% a year on the nominal value of the stock.

Coupon Yield
Also called nominal yield. A bond's coupon payment divided by par value.

Cover
The total net profit a company has available for distribution as dividend, divided by the amount actually paid gives the number of times that the dividend is covered.

Covered Call
A call option that is sold against stock owned by the writer of the call.

Covered Put
A put option that is sold by the owner of a put of the same class with an equal or longer expiration date and an equal or higher exercise price.

Credit Agreement
Outlines the conditions of credit arrangement between the broker and customer concerning a margin account.

Credit Balance
The funds available to a client in a cash or margin account. In a short sale, this balance represents the customer's liability.

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