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Credit spread
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 spread Related: Quality
spread.
CREST
CREST is CrestCos real-time settlement system for UK and Irish shares and other corporate securities.
From 1999, CrestCo will also take ownership of government bond and money markets settlement in the UK.
Cross
Used for listed equity securities. 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-border risk
Refers to 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 financial agent.
Cross default
A provision under which default on one debt obligation triggers default on another debt obligation.
Crossed market
Used in the context of general equities. Market condition whereby the inside market consists of a highest bid
price that is higher than the lowest offer price. See: Overlap the market
Cross hedging
The practice of hedging with a futures contract that is different from the underlying being hedged. Applies to
derivative products. Use of a hedging instrument different from the security being hedged. Hedging
instruments are usually selected with the highest price correlation to the underlying.
Cross holdings
One corporation holds shares in another firm. One needs to allow for cross holdings when aggregating
capitalizations of firms. Ignoring cross holdings leads to double counting
Crossover rate
The return at which two alternative projects have the same net present value.
Cross rates
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. Mainly applies to international equities. Foreign exchange rate
between two currencies other than the U.S. Dollar, the currency into which most currencies are usually
quoted.
Cross-sectional approach
A statistical methodology applied to a set of firms at a particular point in time.
Cross-share holdings
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