Business / Finance Glossary

Credit Union: Applies to derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a 'credit spread.' Antithesis of a debit . . . View Full Definition

Credit Watch: A not-for-profit institution that is operated as a cooperative and offers financial services such as low-interest loans, to its members.

Crediting Rate: A warning by a bond rating firm indicating that a company's credit rating may change after the current review is concluded.

Creditor: The interest rate offered on an investment type insurance policy.

Creditors Committee: Lender of money.

Creditworthiness: A group representing firms that have claims on a company facing bankruptcy or extreme financial difficulty.

Creeping Tender Offer: Eligibility of an individual or firm to borrow money.

CREST: The process by which a group attempting to circumvent certain provisions of the Williams Act gradually acquires shares of a target company in the open market.

Cross: CREST is CrestCo's real-time settlement system for U.K. and Irish shares and other corporate securities. CrestCo has provided settlement systems for government bonds and money market instrum . . . View Full Definition

Cross Hedging: Securities transaction in which the same broker acts as agent for both sides of the trade; a legal practice only if the broker first offers the securities publicly at a price higher than the bid.

Cross Rates: Applies to derivative products. Hedging with a futures contract that is different from the underlying being hedged. Use of a hedging instrument different from the security being hedged. Hedg . . . View Full Definition

Cross-Border Risk: The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currenci . . . View Full Definition

Cross-Default: Describes the volatility of returns on international investments caused by events associated with a particular country as opposed to events associated solely with a particular economic or fi . . . View Full Definition

Cross-Holdings: The prohibited practice of offsetting buy and sell orders without recording the trade on the exchange, thus not allowing other traders to take advantage of a more favorable price.

Cross-Sectional Approach: The return at which two alternative projects have the same net present value.

Cross-Share Holdings: A statistical methodology applied to a set of firms at a particular time.

Crossed Market: A provision under which default on one debt obligation triggers default on another debt obligation.

Crossed Trade: In the context of general equities, happens when the inside market consists of a highest bid price that is higher than the lowest offer price. See: Overlap the market.

Crossover Rate: The holding by one corporation of shares in another firm. One needs to allow for cross-holdings when aggregating capitalizations of firms. Ignoring cross-holdings leads to double-counting.

Crowd Trading: Often used in risk arbitrage. Corporations' or governments' equity share ownership in another corporation's shares.

Crowding Out: Used for listed equity securities. Group of exchange members with a defined area of function tending to congregate around a trading post pending execution of orders. Includes specialists, fl . . . View Full Definition

Crown Jewel: Heavy federal borrowing that drives interest rates up and prevents businesses and consumers from borrowing when they would like to.

Cum Dividend: A particularly profitable or otherwise particularly valuable corporate unit or asset of a firm. Often used in risk arbitrage. The most desirable entities within a diversified corporation as . . . View Full Definition

Cum Rights: With dividend; said of a stock whose buyer is eligible to receive a declared dividend. Stocks are usually 'cum dividend' for trades made on or before the fifth trading day preceding the reco . . . View Full Definition

Cumulative Abnormal Return (CAR): With rights.

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