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A standardized statistical measure of the dependence of two random variables, defined as the covariance
divided by the standard deviations of two variables.
Cost-benefit ratio
The net present value of an investment divided by the investments initial cost. Also called the profitability
glossary.
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of charge but agree to pay all
operating and financing charges of the project.
cost me
Refers to over-the-counter trading. The price I must pay to obtain the securities you wish to buy is [$]
usually, a standard markup (1/8) is then applied for resale to this buyer. Antithesis of can get.
Cost of capital
The required return for a capital budgeting project.
Cost of carry
Used in the context of general equities. Out-of-pocket costs incurred while an investor has an investment
position, examples include interest on long positions in margin account, dividend lost on short margin
positions, and incidental expenses. Related: Net financing cost.
Cost-of-carry market
Applies to derivative products. Futures contracts trade in a cost-of-carry market when the underlying
commodity can be stored, insured, and converted into the future easily and inexpensively. Arbitrageurs,
because of the ease of switching from the spot commodity to futures, will keep these markets in line with
prevailing interest rates.
Cost of equity
The required rate of return for an investment of 100% equity.
Cost of funds
Interest rate associated with borrowing money.
Cost of lease financing
A leases internal rate of return.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital raised from limited partners.
Counterparties
The parties to an interest rate swap.
Counterpart items
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