Glossary

All A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

C

Call

An option contract, which entitles its holder, during a certain period or at a set time, to buy a certain amount of a certain commodity at a previously determined price and which obliges the option writer to sell the basic security if the holder decides to exercise his option.

Candlestick

This type of Asian chart is similar to the bar chart. The bottom of the candlestick marks the opening price, the top the closing price. The relevant top and bottom candlestick lines show the highest or lowest price. If the closing price is above the opening price then the candlestick is shown as light and if below the opening price, then it is dark. Through this colour difference, a candlestick chart is more transparent than a bar chart.

Candlestick Chart

This type of Asian chart is similar to the bar chart. The bottom of the candlestick marks the opening price, the top the closing price. The relevant top and bottom candlestick lines show the highest or lowest price. If the closing price is above the opening price then the candlestick is shown as light and if below the opening price, then it is dark. Through this colour difference, a candlestick chart is more transparent than a bar chart.

Cap

A contractually tradeable right to a previously agreed maximum interest rate, which refers to a benchmark interest rate. As soon as the benchmark interest rate goes above the cap’s maximum interest rate, the buyer makes use of his right to exercise and receives the relevant difference in interest.

Cash Compensation

The settlement of an agreement through payment or receipt of a cash sum instead of the physical delivery of the basic security. In futures with cash compensation, the cash compensation is calculated as the difference between the settlement price of the last trading stage and the settlement price of the previous day. In options, the cash compensation is defined by the difference between the exercise price of the option and the last end-of-day valuation rate of the basic security.

Cash Settlement

The settlement of an agreement through payment or receipt of a cash sum instead of the physical delivery of the basic security. In futures with cash compensation, the cash compensation is calculated as the difference between the settlement price of the last trading stage and the settlement price of the previous day. In options, the cash compensation is defined by the difference between the exercise price of the option and the last end-of-day valuation rate of the basic security.

Cash-and-Carry Arbitration

The purchase of a tool on the spot market and the simultaneous sale of the same tool on the futures market.

CEO - Chief Executive Officer

It is currently heavily discusses in Business Studies whether the concept of a strong CEO should also be used in German companies.

CFO - Chief Financial Officer

Chief Financial Officer

Chart Analysis

The graphical presentation of the price development of a share or an index is called a chart. The presentation is in the form of either a line graph, a bar chart, a candlestick chart or a Point & Figure chart. Using past price developments, the chart-makers predict future price developments. Trends, oppositional and supporting lines are also plotted in the charts as well as floating averages and the turnover being shown. Furthermore certain formations (e.g. triangles, pennants, flags, keys and head-and-shoulders) help the chart analysts to estimate the coming price development. And finally still the most different types of indicators (e.g. Advanced Decline Line, Bollinger Bands, Coppock, MACD, Overbought/Oversold, Relative Strengths and Stochastics) are calculated and assessed in the refinement of the analyses

Chart Engineering

The graphical presentation of the price development of a share or an index is called a chart. The presentation is in the form of either a line graph, a bar chart, a candlestick chart or a Point & Figure chart. Using past price developments, the chart-makers predict future price developments. Trends, oppositional and supporting lines are also plotted in the charts as well as floating averages and the turnover being shown. Furthermore certain formations (e.g. triangles, pennants, flags, keys and head-and-shoulders) help the chart analysts to estimate the coming price development. And finally still the most different types of indicators (e.g. Advanced Decline Line, Bollinger Bands, Coppock, MACD, Overbought/Oversold, Relative Strengths and Stochastics) are calculated and assessed in the refinement of the analyses

Cheapest Deliverable Loan

A loan deliverable to satisfy a futures interest rate, which can be delivered cheaper than all others. The difference between the balance of an invoice and the cost of delivery of the cheapest deliverable loan therefore corresponds to the largest possible profit or the smallest possible loss, compared to the delivery of other loans.

Chinese Wall

The banking term “Chinese Wall” has been used since August 2001 in connection with Deutsche Bank. It means the strict separation of the share analysis and securities trade department within a bank. Certainly this is constantly questioned by market analysts and consumer protectors. This is also the case at Deutsche Bank. After the analysts of the large Frankfurt bank approved an early purchase recommendation for the Telekom shares following the close of the market on Friday, the T-share price rose on Monday against the general negative trend by 1.7 percent. The next day, Deutsche Bank sold 44 million shares by order of a large investor and the price crashed to a new annual low.

CIO - Chief Information Officer

Head of EDP, information processing: the CIO is in charge of the entire area of internal data and information processing.

CKO- Chief Knowledge Officer

Head of Knowledge Management in the company

Clearing House

An associated futures market or integrated institute, which clears all deals closed on the exchange and enters each deal as a contracting party of the buyer’s clearing member and the seller’s clearing member.

Clearing Member

The approved exchange member at the clearing house via whom the non-clearing members have to conduct their business.

Collar

The simultaneous purchase of a cap and the sale of a floor. If the cap premium can be partly or fully financed through the sale of a floor, free hedging is achieved.

Commodity Contract

A contractual agreement to buy or sell a standardised amount of certain goods at a previously set price at an agreed future date. In comparison to financial futures, commodity contracts are for physical goods, such as grain, metals, crude oil etc.

Community Obligations

Loans: a collective term for interest-bearing obligations with a fixed agreed duration. Both civil adjustments (e.g. federation, states and communities) and private companies (industrial obligations, industrial loans) emerge as issuers. Loans are a beneficial financial alternative to investment projects compared to conventional bank financing. A loan securitises a creditor’s claim, that is to say, pays a certain amount, which the security issuer owes the investor. This sum of money, also called nominal value, can for example be €100.00 or another amount and/or another currency. It is to be paid back to the investor at a previously agreed time. The period of time between starting to pay interest on an issue and repayment (redemption) is described as the duration of a security. If part of the duration has already expired then the remaining period until redemption is described as maturity. Loans include, for example, mortgage bonds, industrial obligations, community obligations and civil loans.

Contango

In stock exchange trading: the difference between a security’s nominal value and higher market value, expressed in % of the nominal value.
In foreign exchange trading: the difference between the spot price and the higher forward price.

Contract Bond

A guarantee of the clearing house, which ensures the contract bond for all transactions conducted on the stock exchange.

Contract Month

The month during which the basic security is delivered on a set day.

Conversion

An arbitration strategy, which consists of the purchase of the basic security and a put and the sale of a call of the same type of option. In this strategy, “expensive” calls are sold and “cheap” puts are bought.

Conversion Arbitration

An arbitration strategy, which consists of the purchase of the basic security and a put and the sale of a call of the same type of option. In this strategy, “expensive” calls are sold and “cheap” puts are bought.

COO - Chief Operating Officer

Head of production, engineering: the head of the operating business so to say.

Cost of carry

Positive or negative net financial costs of the ownership of the contract matter, which consist of the storage costs, insurance premiums and the interests to finance the acquisition of the goods, less the interests earned and dividends (with financial assets).

Counterparty Risk

The risk that one contracting party does not fulfil its obligations and this consequently causes financial loss for the other contracting party. On futures and options stock exchanges, the clearing house acts as a counterparty for each transaction.

Covered Calls Writing

The sale of calls, which are covered by the owner of the basic security.

Covered Option

A share option, which is hedged through the provision and pledging of a corresponding number of prescribed titles by the options writer.

Covered Option Writer

The writer of a call who holds a long position in the basic security.

Covered Short Call

The sale of calls, which are covered by the owner of the basic security.

Credit Risk

The risk that one contracting party does not fulfil its obligations and this consequently causes financial loss for the other contracting party. On futures and options stock exchanges, the clearing house acts as a counterparty for each transaction.

Cross Hedge

The hedging of a spot market position in a certain financial tool by entering a future position in another financial tool, whereby the strategy is based on the assumption that the price development of both different tools runs parallel.

CTD Loans

A loan deliverable to satisfy a futures interest rate, which can be delivered cheaper than all others. The difference between the balance of an invoice and the cost of delivery of the cheapest deliverable loan therefore corresponds to the largest possible profit or the smallest possible loss, compared to the delivery of other loans.

Currency Future Contract

A contractual agreement to deliver a standardised amount of a certain currency at a previously negotiated price at a later agreed maturity date.

Currency Option

An agreement to buy or sell a set amount of foreign currency at an agreed price.

Current Market Value

The value at which the options price is above the internal value, that is the difference between the exercise price and the basic security price, and which reflects the remaining period until the option expires.

Current Yield

The average return of a fixed-interest security in relation to the remaining term to maturity is defined as the current yield.

Current share price

 

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