C

Call Option - A contract that gives the right to buy a certain number of shares of a stock at a definite price within a certain time period.

Callable Bond (or Preferred Stock) - A bond or preferred stock that the issuer (e.g., a corporation or municipality) may redeem before maturity.

Capital Appreciation - The increase in a fund share's value.

Capital Gain (Loss) - Profit (loss) from the sale of securities or other capital assets.

Capital preservation - A conservative investment strategy that aims to avoid risk of loss.

Capitalization - The value of all securities issued by a corporation, together with its retained earnings.

Cash Equivalents - Investments that are highly liquid and safe, and considered equal to cash. Examples are Treasury Bills, money market funds and short-term CDs and bonds (maturities of 6 months or less).

Cash Surrender Value - The value a policyowner receives upon termination of a permanent life insurance policy for any reason other than death of the insured. The cash surrender value of a life insurance contract is equal to the cash value less any surrender charge imposed by the insurance company. Cash surrender values are typically not available during the first year or two of the policy's life. Usually, the policyowner is allowed to take the cash surrender value in the form of cash, a reduced amount of paid-up life insurance, or extended term life protection.

Cash Value - The "savings" element of all permanent forms of life insurance. The cash value is the amount of money a policy owner can get for surrendering the policy. The cash value of whole life is pre-determined and fixed when the policy is issued. The cash value of a universal life policy depends on the amount and timing of premium payments, the expense and risk charges the insurance company charges for providing benefits and the interest rate the company credits. The cash value of a variable life or variable universal life policy will vary depending upon the performance of the investment accounts selected by the contract owner. Increases in cash values are not taxable until withdrawn. Some policies may allow the owner to borrow against the cash value.

Cash Value of Life Insurance - The amount of money accumulated in a whole life, universal life or a variable life insurance policy. The cash value is accumulated based on the return of the underlying investments in the policy.

Certificates of Deposit (CDs)- An FDIC-insured account offered by banks and savings and loans. As with a bond, they are usually opened with a single deposit, earn a fixed return and have a set maturity date. Their maturities normally range from three months to five years.

Churning - Unjustified, excessive trading in a customer's securities or commodities account to generate additional brokerage commissions.

Closed-end Fund - An investment company in which a money manager sells a fixed number of shares to the public at a set price. Once all of the shares have been offered, the money manager invests the proceeds in accordance with the fund's investment strategy. After the initial offering, shares in the fund are bought and sold on an exchange similar to stocks. The market price of the fund's shares will fluctuate based on supply and demand and is not directly tied to the value of the securities in its portfolio.

Commercial Paper - Short-term unsecured obligations of corporations or banks with maturities ranging from 2 to 270 days.

Commission - A fee an investor pays a broker for buying or selling securities.

Common Stock - Securities that represent an ownership interest (with voting rights) in the issuing corporation. See preferred stock.

Consumer Price Index - A measure of the change in prices of a fixed basket of goods and services, including food, clothing, medical care, transportation, housing and electricity.

Controllable Expense - An expense over which an individual has control as to how much is spent. Examples of controllable expenses include entertainment, clothing, food, investments and savings.

Conversion Period - The period of time during which the owner of a term policy may convert it to a permanent policy without evidence of insurability.

Convertible - A provision in a term life insurance contract that allows the contract owner to convert the term policy to a permanent life policy without evidence of insurability.

Convertible Security - A bond, debenture, or preferred stock that the holder may exchange for common stock (or another security) of the same company.

Corporate Bonds - A bond issued by a corporation, which creates an obligation by the corporation to pay interest for a specified period and to repay the principal amount at the bond's maturity date.

Coupon Bond - A bond with attached interest coupons that are clipped and presented for payment as interest comes due.

Credit Risk - The risk that a particular company will default on its promise to pay creditors and to make interest and principal payments to bondholders. If a company files for bankruptcy, the court will work with creditors and management to determine the best outcome for all. If the company cannot be restructured and continue to operate, its assets will be sold. If the company's assets are sold or liquidated, creditors and bondholders are generally among the first to be paid. If any assets remain, preferred stockholders are paid, followed by common stockholders.

Currency Risk - The risk that a fluctuation in exchange rates between currencies will negatively affect the return on any foreign securities you own. The standard rule of thumb is that, when the dollar appreciates, or grows stronger, against a foreign currency, the return on an investment in that currency will be reduced. The foreign currency will now translate into fewer of the stronger dollars. Conversely, when the dollar depreciates, or loses value, against a foreign currency, the return on an investment in that currency will be greater.

Current Market Value - The largest amount any buyer is currently willing to pay for an asset.

Custodial Account - An account that allows a custodian to hold securities for the benefit of the owner. The custodian collects investment income for the owner, executes the owner's buy or sell orders, and keeps records of all transactions, among other duties.

Cyclical Stocks - Stocks of corporations whose earnings rise and fall with the business cycle.