Glossary – Finance
There are 24 names in this directory beginning with the letter C.
Calendar Spread
A position that is created by taking a long position in a call option that matures at one time and a short position in a similar call option that matures at a different time (A calendar spread can also be created using put options).
Call Settlement
A procedure for settling a futures contract in cash rather than by delivering the underlying asset.
Call-or-Nothing Put Option
An option that provides a fixed predetermined payoff if the final asset price is below the strike price and zero otherwise.
Callable Bond
A bond containing provisions that allow the issuer to buy it back at a predetermined price at certain times during its life.
Cash Flow Mapping
A procedure for representing an instrument as a portfolio of zero-coupon bonds for the purpose of calculating value at risk.
Cash-or-Nothing Call Option
An option that provides a fixed predetermined payoff if the final asset price is above the strike price and zero otherwise.
Clearinghouse
A firm that guarantees the performance of the parties in an exchange-traded derivatives transaction. (Also referred to as a clearing corporation).
Constant Maturity Treasury Swap
A swap where the yield on a Treasury bond is exchanged for either a fixed rate or a floating rate on each payment date.
Continuous Compounding
A way of quoting interest rates. It is the limit as the assumed compounding interval is made smaller and smaller.
Convertible Bond
A corporate bond that can be converted into a predetermined amount of the company’s equity at certain times during its life.
Covered Call
A short position in a call option on an asset combined with a long position in the asset.
Credit Default Swap
An instrument that gives the holder the right to sell a bond for its face value in the event of a default by the issuer.
Credit Transition Matrix
A table showing the probability that a company will move from one credit rating to another during a certain period of time.
