Cabinet Crowd
Any member of the NYSE that trades in bonds that are not traded frequently--also known as an "inactive bond crowd" or "book crowd." The term arose because limit orders are kept in racks called cabinets that are located next to the bond trading floor.

See: Cabinet Security; Floor; Inactive Stock/Bond; Limit Order; New York Stock Exchange

Cabinet Security
An infrequently traded bond or stock that is listed on an exchange. There are many inactively traded bonds and just a few of such stocks--primarily those trading in ten share units.

See: Cabinet Crowd; Inactive Stock/Bond; Limit Order

Cage
A back office area of a brokerage firm in which funds are received and disbursed.

See: Back Office

Calendar
A schedule of securities that will be offered for sale in the near future. An individual calendar is issued for new stock offerings, municipal bonds, corporate bonds and government securities.

See: Corporate Bond; Government Agency Securities; Municipal Bond; New Issue

Calendar Spread
An options trading strategy wherein options are bought and sold on the same underlying security, with the options having identical strike prices but different expiration dates--also called a "Horizontal" or "Time" spread. Investors hope to profit from a narrowing or widening of the spread between the options.

See: Horizontal Spread; Options; Option Spread; Spread; Strike Price; Underlying Security

Call
1: An option in which the holder has the right to buy a specific number of shares of the underlying security at a specified price within a specified time period.

See: Call Option; Options; Underlying Stock

2: An issuer's right to redeem a bond issue (in full or part) before its maturity date.

See: Callable; Call Price; Maturity Date; Redemption

Callable
Under pre-stipulated conditions, a bond issue that may be redeemed by the issuer before its maturity date. If the issuer does call the issue, in full or part, the bondholder may receive a premium price. Issuers might call a bond when interest rates fall so drastically that it is worth the expense of issuing new bonds at the lower rates. U.S. government securities are not usually callable. However, 30-year Treasury bonds are an exception. They become callable after 25 years.

The term also pertains to preferred shares that may be redeemed by the issuing corporation.

See: Call; Call Price; Call Protection; Maturity Date; Redemption; Treasury Bond; US Government Securities

Called Away
Lingo used to indicate that a particular bond issue was redeemed before its maturity date. This mainly occurs when an issuer exercises a right to retire the bond before its maturity.

See: Bond; Call Features Of A Bond; Callable; Maturity Date; Redemption; Retirement

Call Features Of A Bond
Part of an agreement, called an indenture, that states the schedule and price at which an issuer may make redemptions before the bond's maturity date. Municipal and corporate bonds usually have call protection periods of 10 years.

See: Call Price; Call Protection; Callable; Indenture; Issuer; Maturity Date; Redemption

Call Loan
A brokerage firm that borrows money that is collateralized, has no maturity date, may be terminated at any time, and has interest rates that change daily. If the loan is not called, it is automatically renewed for another day. Otherwise, it is payable on demand the day after it is contracted.

See: Brokers' Loan; Call; Collateral; Maturity Date

Call Loan Rate
The rate of interest a bank charges a brokerage firm on collateralized loans for its margin account clients. The call rate is published daily in the Wall Street Journal.

See: Call Loan; Collateral; Margin; Margin Account

Call Option
A contract that gives the holder the right to buy a specified number of shares of a particular stock, stock index, or dollar face value of bonds at a predetermined price--called the "strike price"--on or before the option's expiration date. For this right, the holder (buyer) pays the writer (seller) a premium. The holder profits from the contract if the stock's price rises. If the holder decides to exercise the option (as opposed to selling it), the writer must give up ownership of the security.

See: Call Premium; Covered Call Option; Option Premium; Options; Strike Price; Uncovered Call Option; Writer

Call Premium
1: In call options, it is the dollar amount that a buyer has to pay the writer (seller) for the right to buy a particular stock or stock index at a specific price by a specific date.

See: Call Option; Options; Writer

2: In bonds, preferred securities, and convertible securities, it is the dollar amount over par that the issuer pays to a holder for redeeming the security before its maturity.

See: Bond; Convertible Securities; Maturity Date; Par; Preferred Stock; Redemption

Call Price
The price at which an issuer may redeem a bond prior to its maturity, or a preferred stock that has a call provision--also known as "redemption price." The issuer reimburses holders for their loss of income and ownership by paying a call premium--the call price is usually higher than the security's par value, the difference being the call premium.

See: Bond; Call Features Of A Bond; Call Premium; Call Protection; Maturity Date; Par; Preferred Stock; Redemption

Call Protection
Time during which a security, with a call provision, cannot be redeemed by the issuer. Corporate and municipal issuers typically have a call protection period of 10 years. Before buying a bond, an investor should be sure to check that it has a call protection. Otherwise, the bond can be called away at any time as designated in its indenture.

See: Call; Callable; Corporate Bond; Indenture; Municipal Bond; Redemption

Call Risk
A bondholder's risk that the bond may be redeemed prior to maturity.

See: Call; Callable; Maturity Date; Redemption; Risk

Cancel Order
A client's instructions to cancel a buy or sell order that was previously placed but not yet executed.

See: Orders

Capital Asset
Regarding individuals, any kind of investment. In relation to corporations, besides security investments, it includes fixed assets such as land, buildings, equipment and furniture. Generally, a capital asset can be any item that is not bought or sold in the normal course of business.

See: Asset; Fixed Assets

Capital Gain
The positive difference between an asset's purchase price and the selling price. Current tax regulations require any gains to be taxed at a rate up to 28%.

See: Capital Gains Distribution; Capital Loss

Capital Gains Distribution
A distribution of profits derived from the assets within a mutual fund. Mutual funds usually distribute these gains on a quarterly basis to their shareholders. These gains are currently taxable at a rate up to 28%.

See: Capital Gain; Mutual Fund

Capital Loss
A negative difference between an asset's purchase price and its selling price. Current tax regulations allow capital losses to be offset dollar-for-dollar against capital gains and $3,000 of ordinary income.

See: Capital Gain

Capital Stock
All shares representing ownership in a corporation as authorized by its charter. A corporation's balance sheet normally includes the number and value of the issued shares in the figures for authorized shares.

See: Authorized Shares; Balance Sheet; Corporate Charter

Cash Account
A brokerage account in which the client pays in full for any purchases. In contrast, in a margin account the broker extends the client credit. Many brokerage clients have both cash and margin accounts. Custodial accounts may not have a margin account.

See: Custodial Account; Margin Account

Cash Dividend
A cash payment that is made to shareholders of corporate stock. The dividends are distributed from current earnings or accumulated profits. Current tax regulations require cash dividends to be taxed as income.

See: Stock Dividend

Cash Equivalent
A very liquid and safe investment or instrument that makes it, in effect, as good as cash.

See: Liquidity; Money Market

Cash Sale
On the day that a trade is executed, the securities are required to be delivered.

See: Delivery; Regular Way Delivery (Settlement); Settlement; Settlement Date

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