A callable security is one which
can be redeemed by the issuer before the expiry
Capital assets include almost everything you own,
such as your home, household furnishings, car, coin or stamp
collections, jewelry, gold, silver and other metals, and investments
such as stocks and bonds.
A capital gain or loss is the gain or loss resulting from
the sale of a capital asset, such as stocks, bonds, art, and coins or
other collectibles. You have a capital gain if you sell the
asset for more than your basis, and
a capital loss if you sell the asset for less than your basis.
You may not deduct losses on the sale of personal-use property such as
your home or car.
A capital gain or loss is classified as long-term
if you hold the asset for more than one year before you dispose of
it. It is classified as short-term if the asset is held for one
year or less.
Long-term capital gains and losses are
added together, and the result is the net long-term capital gain or
Short-term capital gains and losses are added
together, and the result is the net short-term capital gain or loss.
your net long-term capital gain is more than your net short-term
capital loss, this is a net capital gain.
your capital losses are more than your capital gains, you can claim a
maximum of $3,000 in a year, or $1,500 if you are married and filing
Capital real property includes land and buildings, and
any items which are installed in and attached to the buildings or
expense can be claimed on buildings
and attachments which are used to produce income, but not on land.
Capital stock is the total
amount of money (equity) invested in a corporation by its shareholders
(owners). The capital stock is made up of individual shares,
which are registered in the names of the shareholders (also called
A corporation may have more than one class of share, with different
rights attached to them. At least one class of shares will have
voting rights, but there may be classes of shares which do not have
voting rights. There are many corporations with 2 classes of
shares, let's say Class A and Class B shares, where the Class A shares
have voting rights, and Class B shares do not. In many of these
cases, the Class B shareholders will have a much greater investment in
the corporation than the Class A shareholders. The Class B
shares are issued in order to raise funds without losing voting
cash method, or cash basis, for preparing accounting records, the revenues and expenses are recorded when the revenues
are received and the expenses are paid. Using the accrual
method, revenues and costs are recorded
in the accounting period in which they occur, even if the revenue has
not been received or the costs have not been paid.
Most non-farm taxpayers engaged in business are required to use the accrual
method for preparing their tax returns. Farmers may choose the
cash method, but corporations or partnerships engaged in farming must
report their income using the accrual method. There are some
exceptions to this. See the IRS publication Farmers
ATG - Chapter Two - Income, Cash/Accrual/Hybrid
Cashflow per share is cashflow divided by the total
number of common shares outstanding.
The cashflow statement is a financial
statement which reports the reasons for changes in cash balances
for a period of time. It provides details of changes in cash balances
resulting from operating activities, financing activities, and
A central bank, such as the Federal Reserve Bank, tries to prevent the country's currency
from rising or falling too much or too quickly.
Collateral is property which is
pledged as security for the repayment of a loan.
Commercial paper is a short
term debt instrument issued by a corporation and sold through
brokerages to investors.
In financial markets, usually
refers to agricultural or resource products, which
are traded on commodities exchanges.
Examples: wheat, coffee, lumber, oil,
copper, pork bellies, etc.
When a corporation is formed,
common shares are purchased by investors who then become shareholders
in the corporation, and hold voting privileges. Common
shareholders elect the board of directors, and vote on other matters
which require the approval of the owners of the company. If a
corporation is liquidated, the common shareholders have the right to a
share of the assets of the corporation, after any prior claims on the
corporation have been settled.
A corporation may authorize an unlimited
number of common shares to be issued, so that they may raise funds in
the future by issuing more shares.
A conglomerate is a company which
operates in multiple industries.
statements group together the financial
results of a parent company and its subsidiaries.
Consumer price index (CPI)
The consumer price index (CPI) is a measurement
produced by the U.S. Department of Labor which is meant to reflect the increase
in the cost of living. Current and historical CPI data can be
obtained from the Department
of Labor website.
A contract is a legally binding
agreement between two parties.
A corporation is a separate legal entity,
which is formed by application to the government. The corporation
issues shares (capital stock) to one or
more shareholders. A corporation has limited liability.
This means that the liability of the shareholders is limited to the
amount of their investment in the shares of the corporation.
The cost basis is calculated
separately for each stock owned by an investor, and is used to
calculate the gain or loss on the sale of shares of the stock.
Your cost basis is the amount you paid for the shares you are selling,
including any commissions. If you have purchased shares of the
same stock at various times for different prices, the cost basis of
shares sold is the basis of the shares which were acquired first
(first-in first-out). Weighted
average cost per share cannot be used, except for certain mutual
A coupon is the interest payment
portion of a bond. When
a bond is issued, a brokerage company will buy
bonds and will sometimes split them into two parts
to sell separately. One part is the interest
payment (coupon), and the other part is the
maturity value of the bonds, sold as strip
The current account of the U.S. is a measurement of the flow of goods, services, and investment income
to and from other countries. If the U.S. is receiving more money from
investment income and exports of goods and services than it is paying
out, then there is a current account surplus.
Investment income includes interest, dividends, and property rental
These are assets which are
expected to be either consumed or converted to cash within one year,
or are able to be readily converted to cash. Examples are
accounts receivable, inventories, short term investments, and prepaid
expenses such as insurance.
These are debts which
are due to be paid within one year, such as accounts payable, accrued
liabilities, and the portion of long term debt which is due within 1
Current ratio (C/R)
Current assets divided by
current liabilities. This is a measure of the liquidity of the
Example: current assets $25,000, current liabilities $20,000,
C/R = 25,000/20,000 = 1.25
A cyclical stock is one which
tends to have greater price fluctuations over an
economic cycle. Manufacturing and resources
tend to be cyclical sectors.
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