Glossary

C

• Calendar Spread The sale /purchase of a near month call option /put option and the simultaneous purchase /sale of a longer dated call option /put option of the same exercise price.
• Call option An option that conveys to the option buyer the right but not the obligation to purchase shares at a fixed strike price per share at any time during the life of the option.
• Call price The price at which an issuer may redeem a bond or a preferred stock is called Call price. It is also know as Redemption Price.
• Call Spread The simultaneous purchase (sale) of a call at one exercise price and sale (purchase) of another call at a higher exercise price.
• Capital Asset Pricing Model A Model that describes the relationship between risk & required return. In this model a security required rate of return is the risk free rate plus a premium based on the systematic risk of the security.
• Capital Gain (loss) The amount by which the proceeds from the sale of a capital asset exceeds (is less than) the asset's original cost.  
• Capital market The market where for relatively long term, debt or equity securities are traded.
• Capital stock The total number of shares authorized as per the Memorandum of Association of the company for the issuance, including both common stock and preferred stock.
• Capital structure The proportion of a firm's permanent long term financing represented by debt, preferred stock, common equity stock & retained earning.
• Capital turnover Capital turnover calculates the rate of return of equity. It is calculated by dividing total sales by stockholder equity. Higher the ratio, more efficiently the management can utilize its capital.