Jargon Buster

Currency risk

A form of risk that arises from the change in price of one currency against another (fluctuating exchange rates). Whenever investors (or companies) hold assets in another currency (or country), they face currency risk if their positions are not hedged.

Cover

The protection provided by an insurance policy.

Coupon

The fixed rate of interest that a bond pays to a bond-holder as a percentage of its nominal value.

Corporate bonds

Loans issued by companies.

Corporate bond funds

Funds that invest in a selection of individual bonds issued by companies.

Cooling-off period

This is the period of time that you may have in which to change your mind and receive your money back when buying insurance or other financial products. The actual time permitted can vary, so always check your paperwork for this.

Contract note

Written confirmation of the purchase or sale of an investment that is issued to an investor shortly after a trade has been executed.

Contract for difference (CFD)

A trading instrument that allows speculation on shares, commodities and currencies. A CFD is a contract between two people that mirrors the situation of trading a security, without actually buying or selling the security.
The two parties make a contract that the seller will pay the buyer the difference in price after a certain period of time if the designated security's price increases, and the buyer will in return pay the seller the difference if the price decreases.

Commission

This is a payment that an investment company, insurance company or fund manager makes to a financial intermediary (such as a broker or financial adviser) in return for selling, distributing or recommending their financial product or fund.

Collective investment scheme (CIS)

A way of pooling contributions from lots of individual investors into a single investment fund.

Cleared balance

A cleared balance shows money that is in (or has already reached) your account and is ready for you to use.
An uncleared balance includes money that is in transit to your account (or cheques that have not yet cleared) and is not yet available to be spent or withdrawn.

Chain letters

Letters or emails that claim to guarantee you a huge return for a small initial investment and for forwarding on the letter or email to a list of contacts or a number of other people.

Capital growth

Any increase to your original investment after costs, charges and depreciation have been taken into account.

Capital gain

This refers to any profit you make if you sell an asset (such as shares) for a higher price than you originally paid for them.

Capital (savings & investments)

The overall amount of money that you have saved or invested.

CAC

The CAC 40 is a benchmark French stock market index. The index represents the 40 most significant companies traded on the Euronext Paris (previously the Paris Bourse).