Category: Financial Terms

Understanding Bank Checks: How They Work and How to Write One A check is a written, dated, and signed instruction directing a bank to pay a specific amount from the drawer’s account to a named payee. Although electronic payments and cards have largely replaced checks for routine purchases, checks remain useful for certain transactions—especially larger…

Cheapest to Deliver (CTD) Explained: Definition, Formula, and Examples What is Cheapest to Deliver (CTD)? Cheapest to Deliver (CTD) is the deliverable security that minimizes the short seller’s cost when fulfilling a futures contract that allows multiple possible deliverable instruments. It’s most commonly referenced in Treasury bond futures, where several bonds may meet contract specifications…

Chattel Mortgage: Definition, Types, and Examples Key takeaways A chattel mortgage is a loan to buy movable personal property (chattel) where the property secures the loan and the lender retains an ownership interest until the loan is repaid. Common uses include financing manufactured/mobile homes located on leased land and business equipment. Chattel mortgages often have…

Chartered Retirement Planning Counselor (CRPC) Overview The Chartered Retirement Planning Counselor (CRPC) is a professional designation awarded by the College for Financial Planning to individuals who complete its study program and pass a final exam. The credential focuses specifically on retirement planning and equips advisors to assess and create retirement road maps for clients before…

Chartered Financial Analyst (CFA) Definition The Chartered Financial Analyst (CFA) designation is a globally recognized professional credential awarded by the CFA Institute to individuals who demonstrate deep knowledge and ethical standards in investment analysis, portfolio management, and related areas. What the CFA Represents The CFA charter is widely viewed as the gold standard in investment…

Chartered Accountant (CA) Overview A chartered accountant (CA) is a professional accounting qualification used outside the United States. The designation indicates that an individual has the training and skills to perform accounting, auditing, taxation, and advisory services. In the United States, the closest equivalent is the certified public accountant (CPA). What CAs Do Chartered accountants…

Chart of Accounts (COA) A chart of accounts (COA) is an organized index of all financial accounts used in a company’s general ledger. It categorizes and lists every account that records the company’s financial transactions for an accounting period, making it easier to prepare financial statements and analyze financial health. Key takeaways The COA organizes…

Chapter 11 Bankruptcy Chapter 11 is a bankruptcy process that allows a financially distressed business (and, less commonly, an individual) to reorganize its debts and continue operating. Rather than liquidating assets to pay creditors, Chapter 11 aims to restructure obligations and business operations so the debtor can become solvent and repay creditors over time. How…

Channel Stuffing What is channel stuffing? Channel stuffing is a deceptive practice in which a company ships more product to distributors or retailers than end customers are likely to buy in a reasonable period. The goal is to inflate reported sales and earnings for a particular reporting period, often just before quarter- or year-end. Explore…

Chair (Chairperson): Definition, Responsibilities, and How It Differs from the CEO Key takeaways The chair is an executive elected by the board of directors who presides over board and committee meetings and helps set the board’s agenda. The chair oversees board governance, helps build consensus, and influences major board decisions, including CEO selection. The CEO…

Ceteris Paribus Ceteris paribus is a Latin phrase meaning “all else being equal” or “holding other things constant.” In economics, it signals that an analysis isolates the effect of one variable by assuming that all other relevant factors remain unchanged. This simplifying assumption helps describe tendencies and construct testable models, but it is inherently theoretical…

Certified Public Accountant (CPA) A Certified Public Accountant (CPA) is a licensed accounting professional who has met rigorous education, examination, and experience requirements. The credential authorizes holders to provide a range of services—most notably auditing and attestation—that non‑CPA accountants cannot perform. What a CPA Does Prepare, compile, review, and audit financial statements. Prepare and file…

Certified Management Accountant (CMA) Key takeaways * The CMA designation signals expertise in financial accounting, management reporting, and strategic decision-making. * It is issued by the Institute of Management Accountants (IMA) and typically requires a bachelor’s degree, two years of relevant work experience, and passage of a rigorous two-part exam. * CMAs prepare management-focused reports…

Certified Information Systems Auditor (CISA) Certified Information Systems Auditor (CISA) is a professional certification issued by ISACA that validates expertise in auditing, control, and security of information systems. It’s widely recognized across industries and is especially valued for roles in IT audit, risk management, governance, and compliance. Key facts at a glance Issuer: ISACA Exam:…

Certified Financial Planner (CFP) A Certified Financial Planner (CFP) is a financial advisor who has met rigorous education, examination, experience, and ethical standards set by the Certified Financial Planner Board of Standards. CFPs provide comprehensive, client-centered financial planning across areas such as investments, retirement, taxes, insurance, and estate planning—and are required to act as fiduciaries,…

Certificate of Origin (CO): Definition, Types, and How to Obtain One What is a Certificate of Origin? A Certificate of Origin (CO) is an official document used in international trade to certify the country where exported goods were produced. Customs authorities use it to determine applicable duties, enforce trade rules, and confirm eligibility for preferential…

Certificate of Insurance (COI) What is a COI? A Certificate of Insurance (COI) is a document issued by an insurance company or broker that verifies an insurance policy is active and summarizes its primary terms. A typical COI lists the insured’s name and address, policy effective and expiration dates, types of coverage (for example: general…

Certificate of Deposit (CD) What is a CD? A certificate of deposit (CD) is a time-deposit savings product offered by banks and credit unions. You deposit a fixed sum for a set term (commonly 3 months to 10 years) and receive a guaranteed interest rate for that term. In exchange for the fixed return, you…

Certainty Equivalent What it is The certainty equivalent is the guaranteed amount of money an investor would accept today instead of taking a risky prospect that has a higher expected payoff. It expresses how much risk an investor is willing to tolerate: the more risk-averse the individual, the lower the certainty equivalent relative to the…

Centrally Planned Economy: Features, Pros & Cons, and Examples What is a centrally planned economy? A centrally planned (or command) economy is one in which a central authority—typically the government—makes the major economic decisions: what to produce, how much to produce, how goods are distributed, and often the prices and wages. Production is frequently carried…

Central Limit Theorem (CLT) What the CLT says The Central Limit Theorem states that, for a large enough sample size, the distribution of the sample mean (or sum) of independent observations will be approximately normal (bell-shaped), regardless of the population’s original distribution. The sample mean tends to cluster around the true population mean as sample…

Central Counterparty Clearing House (CCP) Key takeaways * A CCP stands between buyers and sellers, becoming the counterparty to both (novation) and guaranteeing trade settlement. CCPs reduce counterparty, settlement, and operational risk through margining, default funds, netting and robust default procedures. Blockchain and tokenization can improve settlement speed and transparency, but so far they have…

Caveat Emptor (Buyer Beware): What It Is, vs. Caveat Venditor Caveat emptor is a Latin phrase meaning “let the buyer beware.” It places the primary responsibility on buyers to investigate the condition and suitability of goods or property before purchase. Historically important in contract and property law, caveat emptor remains relevant in some transactions but…

Catalog of Federal Domestic Assistance (CFDA): What It Was The Catalog of Federal Domestic Assistance (CFDA) was a governmentwide directory of domestic federal assistance programs — grants, loans, scholarships, counseling, insurance, property, and other services — available to individuals, businesses, nonprofits, and government entities. In 2018 the CFDA site was retired and its data was…

Cash Value Life Insurance What it is Cash value life insurance is a form of permanent life insurance that combines a death benefit with a savings component (the cash value). Unlike term insurance, these policies are designed to remain in force for the policyholder’s entire life, provided premiums are paid. How it works Each premium…

Cash Surrender Value — What It Is and How It Works Cash surrender value is the amount a policyholder receives when they cancel a permanent life insurance policy (such as whole life or universal life) before it matures or before death. It represents the policy’s accumulated savings (cash value) after subtracting any outstanding loans, withdrawals,…

Cash Ratio The cash ratio measures a company’s ability to meet short-term liabilities using only its most liquid assets: cash and cash equivalents. It is a conservative liquidity metric used by lenders and investors to assess immediate solvency. Formula Cash Ratio = (Cash + Cash Equivalents) / Current Liabilities Explore More Resources › Read more…

Cash-Out Refinance A cash-out refinance replaces your existing mortgage with a new, larger mortgage and pays you the difference in cash. It converts home equity into a lump-sum payment while creating a new mortgage balance that is larger than the original loan. Key takeaways A cash-out refinance lets you borrow more than your current mortgage…

Cash on Delivery (COD) Cash on Delivery (COD) is a payment method in which the buyer pays for goods at the time they are delivered rather than when the order is placed. Payment can be made in cash, by card, or through the courier’s payment system. COD is common in retail, e‑commerce, and local services…

Cash-on-Cash Return: What it Is and How to Use It Cash-on-cash (CoC) return measures the annual pre-tax cash income an investor receives from a property relative to the actual cash they invested. It’s a simple, widely used metric in real estate—especially for leveraged (mortgage) transactions—because it focuses on cash yield rather than total return. Why…

Cash Management Cash management is the process of monitoring, optimizing, and controlling cash inflows and outflows to maintain liquidity, meet obligations, and support investment and growth decisions. It applies to both individuals and businesses and is central to financial stability. Key takeaways Effective cash management preserves liquidity and reduces the risk of insolvency. Businesses typically…

Cash Flow Statement Definition A cash flow statement summarizes all cash inflows and outflows of a business over a period, organized by operating, investing, and financing activities. It shows how cash moves through a company and complements the balance sheet and income statement. Key takeaways Shows cash generated and used by operations, investing, and financing;…

Cash Flow from Operating Activities (CFO) What it is Cash flow from operating activities (CFO), also called operating cash flow (OCF) or net cash from operating activities, is the cash a company generates (or uses) from its core, recurring business operations — selling goods or providing services. It appears as the first section of the…

Cash Flow from Investing Activities Cash flow from investing activities (CFI) is a section of the cash flow statement that reports cash generated or spent on investment-related transactions during a reporting period. It shows how a company allocates cash to long-term assets and investments that affect future operations and growth. What counts as investing activities…

Cash Flow from Financing Activities (CFF) What is CFF? Cash Flow from Financing Activities (CFF) is the portion of the cash flow statement that shows how a company raises and repays capital. It records cash movements between the company and its owners or creditors—primarily transactions involving debt and equity. CFF is one of the three…