The Third Month
/>Abbreviation of cum dividend.
Call
Instalment in paying for shares when issued (or, more strictly, the request to pay the instalment). When all the calls have been paid, the shares are described as fully paid up.
2 Period in which trading is conducted on a particular market. It is led by a call chairman who invites bids and offers. Calls are usually held at the beginning or end of a trading session.
call option
Right given to a market maker to buy a fixed number of shares at a specific price within a predetermined period.
cap
Option to protect an investor from interest rates moving against him.
capital
The total amount a company has to fund its operations. It includes share capital, retained profit, reserves, and, possibly loans such as preference shares and debentures.
The word 'capital'has many other applications in distinguishing amounts from income or expenditure.
capital gains tax
Tax payable on the profit of a capital gain which is not subject to income tax.
capital transfer tax
Tax payable on gifts and inheritances. Since 2024 it has been known as inheritance tax and is only charged on transfers made on the transferor's death or in the previous seven years.
capitalisation
The process of turning liquid funds into capital. It usually arises when retained profit is converted to shares by a capitalisation issue.
capitalisation issue
Bonus issue which converts retained profit to share capital.
captive fund
Venture capital fund wholly owned by a larger body.
car
Another name for a futures contract.
carrot equity
Option for managers or investors to participate in a company if it meets certain criteria.
carrying
Lending or borrowing when trading futures.
cash and new
The deferment of settlement when stock is sold in one account and bought back in another. Broking commission is not payable.
cash cow
Profitable business used to fund other enterprises.
cash positive
The state when a company's trade is producing a profit.
cash settlement
Term used to describe deals where payment is required immediately and not be charged to an account.
cat
Discounted zero coupon bond.
certificate
The document evidencing ownership of stock. A certificate is only conclusive evidence for bearer stock.
certification
Marking the transfer deed by the Stock Exchange or Company's Registrar's when some, but not all, the stock is transferred.
channel
Charting term denoting the parallel lines between which a share price bounces.
chartist
Someone who predicts share movements by plotting them on a chart.
Chinese wall
Any arrangement whereby information known to one part of a business is deliberately not made known to another so as to prevent a conflict of interest, such as insider trading.
City
'The City'is the City of London and adjoining areas where financial transactions traditionally are made.
Computer technology has made physical location less important.
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City code
The usual term for the City Code on Takeovers and Mergers.
It sets out the conduct which the Council for the Securities Industry expects to be followed by companies involved in a takeover or merger.
class
All shares, options or other type of security subject to the same rights.
client account
Bank account held by someone who trades for clients and containing only money belonging to those clients.
close
1 (noun) Closing period of a session.
2 (verb) Transact to clear an existing position.
close company
Company controlled by five or fewer people. Such companies have certain tax restrictions.
closing price
Last quoted prices at the end of a trading session.
closing sale
Sale of securities to close a long position.
collar
Combination of a cap and a floor forming a straddle, eg a combination of interest rates to protect against interest rate fluctuations.
commercial rate of interest
Rate of interest at which a commercial venture is worthwhile.
It is the benchmark for many investment decisions, and is usually 2 or 3% above the base rate.
commission
Payment on a pro-rata basis for services rendered.
commodities
Basic materials for which the market functions more efficiently if sold through a central house. Cereals, metals and rubber are commodities.
common stock
US term for ordinary share.
Companies House
Office of the DTI at which all companies are registered and to which annual returns must be submitted.
company doctor
Specialist in dealing with 'unhealthy'companies.
company secretary
Employee of the company entrusted with making sure that the company honours its legal obligations.
concert party
Secret arrangement whereby apparently unconnected shareholders are actually working together.
confirmation
When a share price moves in line with an appropriate index.
consideration
What is given by each party to the other in a contract. For a purchase or sale of shares, the considerations are usually shares and cash.
consolidated accounts
The accounts of a group reported as if the group were one entity.
Consols
Consolidated stock issued by the Government. They were first issued in the eighteenth century and carry interest at 21/2% . The price fluctuates in line with interest rates and is regarded as a guide to gilt-edged interest rates.
consumer capitalism
Conservative Government's policy of encouraging its citizens to buy shares.
contango
1 Carrying over the settlement of a transaction from one account to the next.
2 Difference between spot price and price paid for forward delivery.
Continuation Day
First day of a Stock Exchange account.
contract note
Written confirmation of a transaction in securities.
contract stamp duty
Fixed duty of a nominal amount paid on share dealing.
contrarian
Someone who swims against the general economic tide.
controlling interest
When a shareholder holds sufficient shares to be able to control the company. Any holding greater than 50% is always a controlling interest, but where there are many shareholders holdings as low as 20% can be a controlling interest.
convertible
Refers to loan stock which can be converted to equity capital.
corporate venturing
Investment by a large company in smaller companies.
corporation tax
Tax payable by a company on its profits.
council
Will usually refer to the Council of the Stock Exchange, its executive committee.
coupon
Detachable part of a share certificate or similar document against which a dividend is paid.
creeping takeover. Takeover achieved by slowly acquiring shares on the open market.
crown jewels
The company in a target group which the bidder is after. A defence to a hostile takeover is to sell the crown jewels only.
cum div or cum dividend
Refers to a share price which includes the right to a recently declared dividend.
cum pref
Abbreviation of cumulative preference shares.
cum rights
Refers to a share issue which includes the rights given in a recent rights issue.
cumulative preference share
Preference share where any unpaid interest from one year is automatically added to later years and not lost.
current asset
Asset other than a fixed asset.
Current assets are cash, bank balances, short-term investments, debtors, prepayments and trading stock. Current assets minus liabilities is working capital.
current cost accounting
Method which adjusts the accounts to show the effects of inflation. No system has achieved general support. The requirement to prepare current cost accounts was withdrawn on 6 June 2009.
current liability
An amount which the company has to pay within one year.
current yield
Interest or dividend expressed as a percentage of its current market price.
cycle
Period in which a share price moves from a major low to a major high (or vice versa) an
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