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Dictionary of Financial Terms

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Dictionary of Financial Terms

Text of Dictionary of Financial Terms

Page 1: Dictionary of Financial Terms
Page 2: Dictionary of Financial Terms

A Above par:

A share or a bond whose market value is higher than its nominal value or face value. For example, if long-term interest rates decrease after the issue of the bond, the bond's price will increase above par. Opposite: Below par

Français: Au dessus du pair Español: Por encima de la par, por encima de su valor nominal, por encima de la paridad


A time draft (or bill of Exchange ) on which the drawee has written the word "accepted" over his signature, thereby becoming unconditionally obliged to pay at maturity. The draft must first be presented for acceptance, by which the drawee becomes the "acceptor", and then for payment.

(1) Bank(er's) Acceptance :a draft of which a bank is both drawee and acceptor; i.e. the bank gives its guarantee to make the payment should the buyer default.

(2) Trade acceptance: a draft, usually issued from the sales of merchandise, whose drawee and acceptor is an individual or a business entity.

Français: Acceptation Español: Aceptación

Acceptance credit:

Short-term loan by which the bank allows the customer to draw bills on it up to a certain amount (line of credit). The bills are then accepted and usually also discounted by the bank. Most frequently used in international trade.

Français: Crédit d’acceptation Español: Crédito de aceptación

Acceptance price:

In the underwriting business, the price paid by the banks to the issuers for underwriting a new securities' issue. The acceptance price is lower than the issue price to the general public, the difference being the banks' gross profit margin or commission.

Français: Prix d’acceptation Español: Precio de aceptación

Account party:

Page 3: Dictionary of Financial Terms

The party which addresses the bank for the issue of a letter of credit , e.g. the account party can be an importer, a buyer, a construction contractor or a supplier bidding on a contract.

Français: Partie comptable Español: Parte solicitante

Accounts payable:

Money due to suppliers. Also called payables and trade payables.

Français: Dettes passives Español: Cuentas a pagar

Accounts receivable:

Money due from customers. Also called receivables and trade receivables.

Français: Dettes actives Español: Cuentas a cobrar, activo corriente, activo exigible, efectos a cobrar, valores exigibles

Accrual accounting:

An accounting method where revenues are recognized when earned and expenses when incurred, regardless of the actual timing of the cash receipts and expenditures. Compare with cash accounting.

Français: Comptabilité cumulative Español: Contabilidad de valores devengados

Accrued interest:

(1) Interest earned but not collected.

(2) Interest earned, but still unpaid, since the latest payment date.

(3) Interest due from the date of issue or the last coupon date on an interest-bearing security, or from the last date of payment on a loan.

Français: Intérêts courus Español: Interés acumulado, interés devengado, interés vencido

Accrued liabilities:

Accounting items entered on the liabilities side of the balance sheet which relate to previous operations; such as income received during the past financial year but which relates to the new fiscal year, or expenses incurred during the past year but not payable until the following year.

Français: Passifs transitoires Español: Pasivo acumulado

Acid test / Quick ratio:

A liquidity ratios measuring a company's ability to pay immediate liabilities. It is expressed as: current assets less inventories, divided by current liabilities. Compare with Quick ratio.

Français: Ratio de liquidité Español: Prueba ácida

Page 4: Dictionary of Financial Terms

Active income:

Income resulting from the active conduct of trade or business.

Français: Revenu actif Español: Ingreso activo


The physical commodity or security underlying a futures contract. It may also be designated "cash" or "physicals".

Français: Physique(s) Español: Actual(s)


See African Development Bank, Asian Development Bank.

Français: Banque Africaine de Développement, Banque asiatique de développement Español: Banco Africano de Desarrollo, Banco Asiático de Desarrollo

Ad Valorem Duty (According to value):

Any charge, tax, or duty (tariff) calculated and applied as a percentage of the value (price) of the item. The higher the value of an item, the higher the ad valorem duty. See duty.

Français: Droits Ad Valorem (en fonction de la valeur) Español: Derecho ad valorem


A supplement or appendix attached to a document (such as a bill of exchange ) which can be used for endorsement.

Français: Addendum Español: Suplemento


Abbreviation for American Depository Receipts

Français: Quittances/Certificats de Dépôts Américains Español: Recibo americano de depósito


A loan, usually short-term (i.e. one to three years), taking the form of an overdraft to a company or individual.

Français: Avance Español: Préstamo, anticipo, adelanto

Page 5: Dictionary of Financial Terms

Advance against documents (A/D):

A loan secured by the documents covering the shipments, which remain in control of the creditor.

Français: Avance contre documents Español: Préstamo contra documentos, adelanto sobre documentos

Advance import deposits:

A foreign exchange control technique whereby importers are required to deposit a percentage of the value of a product with the designated authorities for a specified period of time.

Français: Avances relatives aux dépôts d’importations Español: Depósitos previos a la importación

Advanced Payment Bond/Guarantee:

(1) A bond provided by a supplier to a buyer to assure him that advance payments made to the supplier will be returned if the contractual obligations are not fulfilled. The bond is issued up to the amount of the advance payments specified in the contract. The value of the bond normally decreases as the supplier fulfils the obligations for which the advance payments were made. Such bond may be either conditional or unconditional.

(2) An arrangement whereby a company employing a contractor makes funds available to him to purchase equipment and to cover the organizational expenses involved in getting the construction under way.

Français: Obligation, Garantie de paiement anticipé Español: Bono de pago anticipado, garantía de pago anticipado


See Receivables.

Français: Avances Español: Advances

Advised letter of credit:

A commercial letter of credit whose authenticity has been verified by a bank, usually located in the beneficiary's country. The bank then advises the beneficiary of the authenticity of the letter of credit, without however undertaking any payment obligation.

Français: Lettre de crédit notifiée Español: Carta de crédito notificada

Advising bank:

Also known as the notifying bank. This is the bank operating in the exporter's country which handles letter of credit on behalf of the foreign bank, by notifying the exporter that the credit has been opened in his favour and informing him of the terms and conditions of the letter of credit. It does not necessarily have responsibility for payment.

Français: Banque notificatrice Español: Banco notificador

Advisory Capacity:

Page 6: Dictionary of Financial Terms

A term designating the fact that the powers of a shipper's agent or representative abroad are limited, and that he is not authorized to take decisions or make adjustments without previously referring to his principals. Compare with without reserve.

Français: Capacité notificatrice Español: Calidad de asesor

After date:

A phrase indicating that payments on a draft or other negotiable instrument are due on a specific date after the presentation of the draft to the drawee. Compare with after sight, at sight.

Français: Après la date Español: Plazo fecha

After sight:

This expression is written on a draft or other negotiable instrument, meaning that it becomes payable on a certain date after having been presented for acceptance (e.g. 90 days). The period starts the date the bill is signed and accepted by the drawee. In order to let the holder of the bill know when the bill becomes payable, the drawee must add the date of his acceptance.

Français: Après présentation Español: Plazo vista

After-tax cash flow:

The total cash generated by an investment annually. This is defined as profit after-tax plus depreciation, or operating income after tax plus the tax rate times depreciation.

Français: Flux de trésorerie après impôts Español: Flujo de caja después de impuestos

After-tax real rate of return:

This is defined as the after-tax rate of return on an investment minus the inflation rate.

Français: Taux de rentabilité réel après impôts Español: Tasa de rendimiento real después de impuestos, tasa de rentabilidad real después de impuestos

African Development Bank:

Established in 1963, with its headquarters in Abidjan, Côte d'Ivoire. The ADB provides financing through direct loans to African member states to cover the foreign exchange costs incurred in bank-approved development projects in these countries. Fifty-one African countries are members. The ADB is financed by member countries of the OECD.

Français: Banque Africaine de Développement Español: Banco Africano de Desarrollo

African Development Foundation (ADF):

An independent, non-profit government corporation established to provide financial assistance to grass-roots organizations in Africa. The ADF became operational in 1984.

Page 7: Dictionary of Financial Terms

Français: Fondation Africaine de Développement Español: Fundación africana para el desarrollo, FAD

African Development Fund (ADF):

A fund managed by the ADB.

Français: Fonds Africain de Développement Español: Fondo africano para el desarrollo

Agency fee (management fee):

An annual fee payable by the borrower, usually to cover the costs incurred by the lender in administering the loan.

Français: Honoraires, commission d’agence (honoraires, commission de direction) Español: Comisión de agente, comisión de administración, comisión de gestión

Agency for International Development (AID):

Created in 1961 to administer foreign economic assistance programmes of the US government. AID has field missions and representatives in approximately 70 developing countries in Africa, Latin America, the Caribbean and the Near East.

Français: Agence pour le Développement International Español: Agencia para el Desarrollo Internacional


A legally independent person, authorized by another person (the principal) to act on his behalf as an intermediary or to conclude business transactions. The agent usually receives a fee or a commission (often a percentage of the sale price) for the services rendered. In a syndicated loan, the agent is the bank which manages the loan on behalf of the participating banks.

Français: Agent Español: Agente, representante, mandatario

Agent distributor service (ADS):

A fee-based service providing U.S. exporters with a customized overseas search for interested and qualified foreign representatives (such as foreign import agents and distributors).

Français: Agent distributeur de services Español: Servicio de agente distribuidor


A security sells at agio when its market value is higher than its nominal or par value. In foreign exchange operations this is the premium paid to exchange one currency for another. Opposite: Disagio.

Français: Agio, Prime Español: Agio

Page 8: Dictionary of Financial Terms

Agreed Minute:

This embodies the terms agreed upon in a Paris Club rescheduling meeting. It forms the basis for bilateral discussions between individual creditor governments (including export credit agencies) and debtor countries on agreements for implementation of the rescheduling. The Minute normally specifies the coverage of debt-service payments to be consolidated, the cut-off date, the consolidation period, the proportion to be rescheduled and the deferred debt.

Français: Procès verbal convenu Español: Acta aprobada


The Association of International Bond Dealers, setting market trading rules for the secondary market of Eurobonds.

Français: AIBD Español: AIBD

Air waybill:

A bill of lading used for the transportation of air freight, describing conditions, liability, shipping instructions, nature of the commodity and applicable transportation charges. It is a non-negotiable instrument of air transport acting as a receipt for the shipper, and indicating that the carrier has accepted the goods listed therein and is thereby committed to carry the consignment to the airport of destination, according to the specified conditions. Compare Inland Bill of Lading, Through bill of lading.

Français: Lettre de voiture aérienne Español: Carta de porte aéreo

All-in cost:

Total costs, whether foreseeable or not.

Français: Tout-inclu dans le coût Español: Costo todo incluido

All-in rate:

The interest rate on a loan which includes the cost of Compensating balances, Commitment fees and any other charges.

Français: Tout-inclu dans le taux Español: Tasa todo incluido


A slip of paper attached to a bill of Exchange , acceptance or notes, providing space for additional endorsement when the back of the bill is already filled with names.

Français: Allonge Español: Allonge

All Risks Coverage:

Page 9: Dictionary of Financial Terms

A clause used in marine insurance, providing the shipment with the broadest kind of standard coverage. It excludes, however, damage to the shipment caused by war, strikes and riots. Compare with the Free of Particular Average and With Average clauses.

Français: Couverture de tous les risques Español: Cobertura contra todo riesgo


A term referring to the side of a ship. Goods to be delivered alongside are to be placed on the dock or within reach of the transport ship's tackle so that they can be loaded on board. Goods are delivered alongside at the port of embarkation, excluding loading fees.

Français: Le long Español: Al costado


A Yield indicator based on the risk of a security or a portfolio in relation to the market risk. A positive Alpha indicates the extra yield of the security or portfolio awarded to the investor for having taken a risk, rather than simply accepting the average market return. Thus, an alpha of 0.5 means that the security or portfolio has outperformed the estimated market-based return by 0.5%. See also Beta.

Français: Alpha Español: Alfa

American Depository Receipts (ADRs):

Domestically traded securities representing claims of foreign stocks.

Français: Certificats de dépôt américains Español: Recibo americano de depósito

American option:

An option which can be exercised at any time between the date of purchase and its expiry date. Compare with a European Option.

Français: Option américaine Español: Opción estadounidense


(1) The gradual reduction of a debt, through regular repayments of principal instalments and payment of current interest over an agreed period of time, so as to liquidate the debt.

(2) In accounting, a term indicating the systematic writing off of an account or asset over its estimated life. See Depreciation.

Français: Amortissement Español: Amortización

Andean Group:

Page 10: Dictionary of Financial Terms

A group of Latin American countries formed in 1969 to promote regional economic integration among medium-sized countries. Its member states include Bolivia, Colombia, Ecuador, Peru and Venezuela.

Français: Groupe andéen Español: Grupo Andino


A stream of annual cash flows for a specified period of time. Opposite: Perpetuity.

Français: Annuité Español: Renta anual, anualidad


A set of laws and practices intended to counteract dumping practices.

Français: Antidumping Español: Antidumping

A/P (Authority to pay):

An authorization, usually by a bank to a seller, for the purchase, with or without recourse, of draft(s), document(s) and/or goods up to a designated amount.

Français: Autorisation à payer Español: Autoridad para pagar

Application for letter of credit:

A written request by an applicant (an importer or purchaser) to his bank to open a letter of credit. The notification of the opening of the letter of credit is usually done via a correspondent bank.

Français: Demande de lettre de crédit Español: Solicitud de carta de crédito


The purchase of financial instruments (e.g. foreign exchange or securities) or commodities on one market with the intention of selling them simultaneously on another market to take advantage of the price differential between the two markets. The arbitrageur (the person carrying on the business of arbitrage) may earn a profit by exploiting the differences in the rates of exchange or the prices of securities or commodities involved. Arbitrage is attractive only if the price difference is large enough to cover the costs incurred (such as the costs of transporting the goods from one market to the other).

Français: Arbitrage Español: Arbitraje

Arrangement on Guidelines for Officially Supported Export Credits:

See Consensus.

Français: Dispositions directrices pour les Crédits à l’export officiellement soutenus Español: Arrangement on Guidelines for Officially Supported Export Credits

Page 11: Dictionary of Financial Terms

Arrangement Fee:

Fee charged by a commercial bank which assists in arranging complex forms of financing, including export credit insurance. Sometimes called a Management Fee.

Français: Honoraire d’arrangement Español: Comisión de acuerdo


Generally speaking, debt-service payments not made by the due date. In the specific field of export credits, arrears are overdue payments by borrowers, which have not yet resulted in claims against the export credit agencies.

Français: Arriérés Español: Mora, atrasos


Association of South-East Asian Nations.

Français: Association des Nations du sud-est asiatique Español: Asociación de Naciones del Sudeste Asiático

Asian Development Bank (ADB):

Established in 1966 to foster economic growth and co-operation in Asia and to help accelerate the economic development of members. The ADB headquarters are in the Philippines.

Français: Banque Asiatique de développement Español: Banco Asiático de Desarrollo

Asian Pacific Economic Co-operation (APEC):

The Asian Pacific Co-operation was initiated by Australia at the Canberra Conference (Australia) of 1989. Its members are: Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand (members of the Association of South-East Asian Nations countries), plus Australia, Canada, Chile, China, Hong Kong, Japan, New-Zealand, Papua-New-Guinea, South Korea, Taiwan and the United States.

Français: Coopération économique de l’Asie du Pacifique Español: Cooperación Económica Asia-Pacífico (CEAP)

Asked/ask price:

The price at which securities (including foreign exchange or foreign bank notes) are offered for sale. Opposite: Bid.

Français: Cours vendeur Español: Precio de vendedor, precio de oferta, precio nominal

Asset-backed security:

A security issued by a financial institution and backed by an asset (e.g. a commodity).

Page 12: Dictionary of Financial Terms

Français: Titre garanti par des actifs Español: Título con activos en garantía

Asset/equity ratio:

The ratio of total assets to stockholder’s equity.

Français: Ratio actifs sur fonds propres Español: Relación entre activos y beneficios

Asset turnover ratio:

A measure of asset efficiency, defined as net sales divided by total assets.

Français: Ratio actifs / Chiffre d'affaires Español: Razón de rotación de activos


A term indicating everything a company owns which has a monetary value listed on the balance sheet (cash funds, credit balances, supplies, equipment and facilities, etc.). Assets can be financial assets (such as bills), fixed assets (equipment) and intangible assets (goodwill, patent). Opposite: liabilities.

Français: Actifs Español: Activos


The acquirer of a title, interest or ownership transferred by an assignor. See Assignment.

Français: Cessionnaire Español: Cesionario


The transfer of the legal right, interest or ownership (title) from a creditor (assignor) to a new creditor (assignee). A distinction is made between a single assignment (where only a specific claim is assigned) and a blanket assignment where all receivables are assigned. In the case of an option, an assignment is made when the option writer (seller) receives an exercise notice obliging him to sell (in the case of a call) or to buy (in the case of a put) the underlying security at the specified strike price.

Français: Cession Español: Cesión, traspaso, transferencia

Assignment credit:

A credit granted against the fiduciary assignment of one or several receivables to a bank. The accounts receivable act as a security for lending. See Discount credit.

Français: Crédit contre cession Español: Crédito cedido

Page 13: Dictionary of Financial Terms


The person who transfers the title, interest or ownership to a third party. See Assignment.

Français: Cédant Español: Cedente

Association of International Bond Dealers:


Français: Association internationale des courtiers en obligations Español: Asociación de Agentes Internacionales de Bolsa

Association of South-East Asian Nations (ASEAN):

Established in 1967 to promote political, economic and social co-operation among its six member countries: Indonesia, Malaysia, Philippines, Singapore, Thailand and Brunei. Laos, Papua-New-Guinea and Vietnam are observers, whereas South Korea has special status.

Français: Association des Nations du sud-est asiatique Español: Asociación de Naciones del Sudeste Asiático

At best:

A buying or selling order by a customer to a broker, to buy or sell a certain security at the best currently available price. In the case of a buying order it is therefore "at the lowest possible price", and "at the highest possible price" in the case of selling order. The buyer or seller does not have to specify any maximum or minimum price for the execution of the order by the broker.

Français: Au mieux Español: Por lo mejor

At call:

Money deposited by a bank or at a bank, without any fixed maturity date. The money may be withdrawn at any time when the depositor "calls" for it.

Français: Sur demande Español: A la vista

At market:

See At best.

Français: Au prix du marché Español: At market

At par:

A term meaning the "same value", implying that the price of the security is equal to its face value. Securities are issued at par, par price, par rate. Compare with above par and below par.

Français: Au pair Español: At par

Page 14: Dictionary of Financial Terms

At sight:

A term indicating that payment on a draft or other negotiable instrument is due upon presentation or demand. Compare with After Date, After Sight.

Français: A vue Español: A la vista

At-the-money option:

An option with an exercise price equal to, or close to, the current market price of the underlying security.

Français: A l'option monétaire Español: Opción a la par

Authority to pay:

See A/P.

Français: Autorité de paiement Español: Autoridad para pagar

Authorized bank:

A bank allowed by a country’s public authorities to process the decentralized payment transfers.

Français: Banque autorisée Español: Banco autorizado, banca delegada


A form of guarantee, generally given by a commercial bank, on a negotiable instrument. An aval is usually an unconditional guarantee of payment and is not affected by the terms of the underlying transaction. Avals are recognized only in certain countries (mainly European), though usually not in countries with an Anglo-Saxon legal base.

Français: Aval Español: Aval

Average collection period:

The number of days required, on average, to collect accounts receivable.

Français: Période d’encaissement moyenne Español: Período promedio de cobranza

Average due date:

The mean date of payment of several sums becoming payable at different dates (applies particularly to a bill of exchange).

Page 15: Dictionary of Financial Terms

Français: Date d’échéance moyenne Español: Fecha promedio de vencimiento

Average Life:

The sum of the amounts outstanding of the loan at the end of each year, throughout its entire life, divided by the total principal sum borrowed. It gives the average life of the loan in years.

Français: Vie moyenne Español: Vida media

Average payment period:

The number of days, on average, in which a firm pays off its accounts payable.

Français: Période de paiement moyenne Español: Período medio de pago

Average rate of return (ARR):

The ratio of average net earnings to average investment.

Français: Taux moyen de rentabilité Español: Tasa de rentabilidad media

Average term:

In relation to a bond issue, the maturity calculated on the date halfway between the earliest and the latest date stipulated for repayment.

Français: Durée moyenne Español: Plazo promedio

Page 16: Dictionary of Financial Terms

B Back bond:

A Eurobond created by the exercise of a warrant. Also known as a virgin bond.

Français: Back bond Español: Bono garantizado

Back-to-Back Letter of Credit:

A letter of credit issued for the account of a buyer of merchandise already holding a letter of credit in his favour. The back-to-back L/C is issued in favour of the supplier of the merchandise to cover the shipment stipulated in the L/C already held by the buyer. The terms of L/Cs, except for the amount and expiration date, are similar, and the same documents presented under the "back to back" L/C are subsequently used against the L/C in favour of the buyer. However, the buyer or beneficiary of the first credit, substitutes his draft and invoice for those presented by the supplier.

Français: Lettre de crédit "Back-to-Back" Español: Carta de crédito garantizada

Back to back loan:

A loan in which two companies in different countries borrow each other's currency for a specific time period, with repayment of the other's currency at an agreed maturity. This technique allows companies to eliminate or reduce their foreign exchange risks. Also known as a Parallel loan.

Français: Prêt "Back to back" Español: Préstamo cruzado en divisas, crédito con garantía de otro crédito


A term indicating that futures prices of a commodity are lower than spot prices. If a commodity moves into backwardation the markets expect prices to fall. Opposite: Contango.

Français: Déport Español: Mercado invertido

Bad debt:

A non-performing loan i.e. a loan which is not repaid. To absorb losses arising from bad debts over a period of time, banks usually set aside provision out of their profits.

Page 17: Dictionary of Financial Terms

Français: Mauvaise dette, dette irrécouvrable Español: Deuda incobrable, deuda morosa, crédito fallido


An accounting term indicating the difference between the total of all credit items and that of all debit items.

Français: Solde Español: Saldo, balance, balanza

Balance of payments:

A statement which summarises all economic transactions between a country and the rest of the world during a period of time, usually a calendar year. The balance of payments is made up of the current account balance, reporting the external trade in merchandise and services (including income on investments), and the capital account, reporting direct and portfolio investments and capital flows in general.

Français: Balance des paiements Español: Balanza de pagos

Balance of payments deficit:

A negative imbalance of some specific components within the balance of payments.

Français: Déficit de la balance des paiements Español: Déficit de la balanza de pagos

Balance of payments surplus:

Opposite of Balance of payments deficit.

Français: Excédent de la balance des paiements Español: Superávit de la balanza de pagos, excedente de la balanza de pagos

Balance of trade:

The monetary difference between a country's total imports and its exports. If exports exceed imports the country experiences a favourable balance of trade. Also known as merchandise trade balance.

Français: Balance commerciale Español: Balanza comercial

Balance of trade deficit/surplus:

When the value of a country's exports is lower/higher than that of its imports.

Français: Balance commerciale déficitaire/excédentaire Español: Deficit/Superávit de la balanza comercial

Balance Sheet:

Page 18: Dictionary of Financial Terms

A complete double entry account statement of assets and liabilities drawn up by an enterprise on a specific date (usually at the end of a fiscal year). Total liabilities always equal total assets. The asset side of the balance sheet provides information on the use of the company's funds. The liabilities’ side details sources of external financing (i.e. cash, money market loans and advances, etc) and the composition of the shareholders' equity. Compare with Profit and loss statement.

Français: Bilan Español: Balance de situación, balance general, balance

Balloon maturity:

See Sinking fund requirement.

Français: Balloon maturity Español: Requisito de fondo de amortización

Balloon repayment:

A loan whose repayments are not spread evenly over its life. Interest payments are accumulated and are paid along with the principal in one lump sum at the end of the loan period.

Français: Remboursement unique Español: Reimbolso balloon

Bank(er's) Acceptance; Bank bill:

A draft or bill of exchange whose acceptor is a bank. When accepted for payment by a bank it becomes a banker's acceptance and may be used by the drawer or payee as collateral, or may be sold and discounted. Such an arrangement originates on the initiative of the importer, who instructs his local bank to provide for a commercial acceptance credit to the bank of the exporter. The bank of the exporter then issues an acceptance credit, in effect guaranteed by the foreign bank, to the exporter under which he may draw a time bill of exchange maturing in 60 or 90 days. Supported by the documents demonstrating the shipment, this bill of exchange is then accepted by the bank which endorses it, thus signifying that it will pay the bill at maturity. The exporter may retain the bill until maturity or sell it on the discount market. This technique is frequently utilized in the financing of foreign trade, making possible the payment of cash to an exporter covering all or a part of the value of his shipment. When the amounts involved are large and in support of commodity transactions the banker’s acceptance can be placed on the market and sold through a syndicate of banks.

Français: Acceptation bancaire, effet bancaire Español: Aceptación bancaria, letra bancaria

Bank commission:

A bank charge for special services (credit commission) or for risk coverage, added to the interest on loans extended to its clients.

Français: Commission bancaire Español: Comisión bancaria

Bank discount rate:

(1) The rate at which a bank discounts notes. A rate quoted on a discount basis understates bond equivalent yield. This difference must be calculated when comparing the return on yields on a discount basis and equivalent coupon securities.

Page 19: Dictionary of Financial Terms

(2) A technique of evaluating the yield of short-term non-interest-bearing money market securities to make them comparable with equivalent coupon securities.

Français: Taux d'escompte bancaire Español: Tasa de descuento bancario, tasa oficial de descuento

Bank draft:

An international transfer of funds through an instrument very similar to a cheque.

Français: Transfert bancaire Español: Giro bancario

Bank for International Settlements (BIS):

An international bank based in Basel, Switzerland, serving as a forum for monetary co-operation between several European central banks, the Bank of Japan and the U.S. Federal Reserve System.

Français: Banque des Règlements Internationaux (BRI) Español: Banco de Pagos Internacionales, BPI

Bank guarantee:

A guarantee, issued by the bank of the foreign purchaser, to pay the seller/exporter up to an agreed percentage of the value of the goods shipped in case of default by the purchaser. See also Letter of credit.

Français: Garantie bancaire Español: Garantía bancaria, fianza bancaria, aval bancario

Bank-issued medium-term note:

A medium-term certificate of indebtedness, issued by a bank on demand, with maturities ranging between 2 to 8 years.

Français: Papier bancaire à moyen terme Español: Pagaré a mediano-plazo emitido por el banco

Bank notes:

Promissory notes issued by the Central Bank, payable to the bearer on demand.

Français: Papiers bancaires Español: Billete bancario

Bank release:

A negotiable time draft drawn on and accepted by a bank, which adds its credit and standing to that of the importer.

Français: Traite à terme Español: Descargo bancario

Banker's Bank:

A bank established by consent by independent and unaffiliated banks as a clearing house for financial transactions.

Page 20: Dictionary of Financial Terms

Français: Banque des banquiers Español: Banco de banqueros

Banker's draft:

This is an order from a buyer/importer to his bank to make a payment to the bank of the seller/exporter. The draft is sent to the exporter who presents it to his bank for payment. It is regarded as cash and cannot be returned unpaid. The exporter's bank in return presents it to the buyer's bank for reimbursement.

Français: Chèque bancaire Español: Giro bancario, letra bancaria

Bank for International Settlements:


Français: Banque pour les Réglements Internationaux Español: Banco de Pagos Internacionales, BPI


See Countertrade.

Français: Troc Español: Trueque

Base currency:

The currency against whose value an exchange rate quote is made between two currencies. For example, if the French Franc is trading at 4.85 French Francs per Dollar, the Dollar would be the base currency and the French Franc the quoted currency.

Français: Monnaie de base Español: Divisa de referencia

Base lease term:

The underlying term of the lease used by the lessor in computing interest payments and regarded by the lessee as the minimum time period during which he will have the use and custody of the equipment.

Français: Délai de base du bail Español: Período de arrendamiento de base

Basic Balance:

In a balance of payments, the net balance of the combined current account and capital account.

Français: Basic Balance Español: Balanza básica

Basis point:

Page 21: Dictionary of Financial Terms

A term indicating one hundredth of one percentage point (.01%). 100 basis points = 1%. Typically used in expressing rate or yield differentials.

Français: Point de base Español: Puntos básicos

Basis swap:

An interest rate swap from one floating instrument into a non floating instrument in the same currency, undertaken to eliminate or minimize interest-rate risk.

Français: Swap de base Español: Swap de índices, intercambio de índices


A stock market investor pessimist who expects share prices, currency values or commodity prices to fall. Opposite: Bull.

Français: Baissier Español: Bajista, especulador a la baja

Bearer bond:

A bond whose owner is not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives payments by physically detaching coupons from the bond certificate and handing them to the paying agent. All Eurobonds are issued in bearer form.

Français: Obligation au porteur Español: Bono al portador, obligación al portador

Bearer mortgage note:

A mortgage debt instrument or note, issued in a bearer form. The holder of the instrument or note at any time is the creditor.

Français: Cedule hypothécaire au porteur Español: Pagaré de hipoteca al portador

Bearer security:

A security whose ownership belongs to whoever carries it. A bearer security is payable to its holder.

Français: Titre au porteur Español: Título al portador

Beggar-my-neighbour policy:

An international trade policy by a country aimed at seeking domestic gains at the expense of its trading parties (for instance through competitive devaluations). Such a policy may lead to trade wars.

Français: Beggar-my-neighbour Español: Beggar-my-neighbour policy

Page 22: Dictionary of Financial Terms

Below par:

A share or a bond whose market value is below its nominal value or face value. A bond will be rated below par when the market interest rates are higher than at the time the bond was issued. This may also happen if investors are sceptical about the creditworthiness or future prospects of the company or government which has issued the bond. Opposite: Above par.

Français: Au dessous du pair Español: Por debajo de la par, por debajo de su valor nominal, por debajo de la paridad


The person in whose favour a letter of credit, an insurance policy or any other payment instrument is issued.

Français: Bénéficiaire Español: Beneficiario

Berne Union (International Union of Credit and Investment Insurers):

An association founded in 1934, gathering over 40 export credit agencies from developing and industrialised countries. The Union works for sound principles in the export credit insurance business, through the exchange of information, constant consultation and close co-operation between its members. The agencies participating in the Berne Union do so as insurers and not as representatives of their respective governments.

Français: Union de Berne (L’Union Internationale des assureurs de Crédit et d’Investissement) Español: Unión de Berna (Unión Internacional de Aseguradores de Crédito e Inversiones)


An indicator of the risk of a share or a portfolio in relation to the average market risk. A Beta of 0.7 implies that the yields of the share or portfolio are likely to move up or down by 70% of the average market change. A Beta of 1.2% indicates that such yields are likely to move up or down 20% more than the average market change. Beta is an index of systematic risk, i.e. risk linked to general market conditions which cannot be diversified. See also Alpha.

Français: Beta Español: Beta

Bid; Buying price:

The price or the terms on which a person is willing to buy (e.g. securities, commodities, foreign exchange etc.). Opposite: Asked price, Offer. See also Tender.

Français: Cours acheteur Español: Cotización de compra, precio de compra, precio de oferta

Bid Bond:

A guarantee by a party (usually a bank) on the order of the seller, to pay a part of the bid price (usually 5-10%) as compensation to the buyer should the seller, having accepted the bid by the buyer, be unwilling or unable to fulfil the tender terms and undertake the corresponding delivery or performance contract. Bid bonds are frequently used in export financing. See also Guarantee bonds.

Français: Caution de soumission Español: Fianza de licitación, caución de licitación, aval de oferta

Page 23: Dictionary of Financial Terms

Bid bond coverage:

An insurance or guarantee which protects the supplier or issuing bank from the unjustified or capricious calling of the bid bond.

Français: Garantie de couverture Español: Cobertura de la fianza de licitación

Bid rate:

The lower range of interest rate quotations, i.e. the interest rate a bank is prepared to pay for deposits or to acquire securities.

Français: Taux demandé Español: Tipo comprador

Bilateral Agreements:

Agreements reached bilaterally between a debtor country and each of the creditor countries participating in a Paris Club rescheduling. The agreements establish the legal basis of the Debt rescheduling, as set forth in the Agreed Minute, specify the interest rate on amounts deferred or rescheduled, etc.

Français: Accords bilatéraux Español: Acuerdos bilaterales

Bilateral deadline:

The date by which all of the Bilateral agreements must be concluded. The period for concluding bilateral agreements is usually around six months from the date of the Agreed Minute.

Français: Date limite bilatérale Español: Fecha límite bilateral, plazo máximo bilateral

Bilateral investment treaty (BIT):

A bilateral treaty meant to ensure national or most-favoured-nation treatment for foreign investments deriving from the partner country. BITs ensure the right to make investment-related transfers and assign top managers in the foreign country without regard to their nationality. They also guarantee that expropriation takes place only in accordance with accepted international rules, and access to impartial and binding international arbitration for the settlement of disputes.

Français: Traité d’investissement bilatéral (TIB) Español: Tratado bilateral sobre inversiones

Bill for collection:

A bill of exchange presented to a bank for collection (and not for discounting). On collection the countervalue of the bill is credited to the account of the client.

Français: Effet à l’encaissement Español: Letra por cobrar

Page 24: Dictionary of Financial Terms

Bill guarantee:

A commitment, generally by signature of the document, to honour a bill of exchange if the specified signatories fail to do so.

Français: Garantie d’un effet Español: Garantía de la letra

Bill of Exchange (Draft):

An instrument of payment frequently used in international business. It is an unconditional written order signed by the exporter and addressed to the importer to pay, on demand or at a specified future date, a stipulated monetary sum to the exporter. See also Commercial paper, Draft, Letter of credit.

Français: Lettre de change (Traite) Español: Letra de cambio, giro

Bill of Lading (B/L):

A document setting out the terms of the contract between the exporter of the goods and the carrier, under which the freight is to be transported from the port of shipment to that of destination. The B/L serves as a document of title, a contract of carriage and a receipt of goods. Its holder has the right to gain possession of the shipped goods.

There are two main types of B/L:

(1) Straight bill of lading: A non-negotiable B/L, under which the goods are handed directly to the stipulated consignee.

(2) Negotiable or Shipper's order bill of lading: This can be bought, sold or traded while the goods are in transit, or used to support a Letter of credit transaction. To take possession of the shipped goods, the final holder of the B/L needs the original or a copy as proof of ownership.

See also Air Waybill, Inland Bill of Lading, Ocean Bill of Lading, Through Bill of Lading, Claused Bill of Lading, Clean Bill of Lading, Foul Bill of Lading.

Français: Connaissement Español: Conocimiento de embarque

Bill renewal:

Prolonging the validity of a bill by postponing its expiry date.

Français: Effet renouvelable Español: Renovación de la letra


Abbreviation for Bill of lading.

Français: Connaissement Español: Conocimiento de embarque


A temporary insurance coverage pending the later issuance of an insurance policy or certificate.

Français: Couverture d’assurance temporaire Español: Nota de cobertura, póliza de seguros provisional

Page 25: Dictionary of Financial Terms


See Bank for International Settlements.

Français: Banque pour les Réglements Internationaux Español: Banco de Pagos Internacionales

Black economy:

Transactions of goods and services which are not declared for tax payment and which neither show up in trade statistics nor are taken into account in the calculation of the Gross National Product (GNP).

Français: Economie de l’ombre Español: Economía sumergida

Black market:

A general term to indicate an unofficial, parallel market. For instance, foreign exchange black markets typically flourish in those countries where the local currency is kept artificially higher than its real value.

Français: Marché noir Español: Mercado negro

Blank draft:

A draft passed on by the drawer without all the details having been filled in. The recipient of the blank draft is entitled to fill out the draft himself, unless otherwise specified in the document, with the liability remaining with the drawer.

Français: Effet bancaire Español: Giro en blanco

Blanket assignment:

The assignment of the totality of the debtor's present and future claims to third parties.

Français: Cession globale Español: Asignación general, cesión global

Blanket credit line:

A fixed amount credit line established for a borrower, i.e. the amount of outstanding credit which may not be exceeded at any time. Such credit lines can be established for corporate borrowers or countries.

Français: Ligne de crédit globale Español: Línea de crédito general

Blended Interest Rate:

The effective cost of funds from all lenders, weighted for the amounts provided by each and calculated for the period of time and the interest rate applied by each lender. Additional charges such as commitment and guarantee fees may be also included in this calculation.

Page 26: Dictionary of Financial Terms

Français: Taux d’intérêt effectif Español: Tipo de interés combinado, tipo de interés mixto

Block credit:

A general credit available in an open-ended lending arrangement available for a specified time period. e.g. a credit line, agreed between an importing and an exporting country, for the extension of long-term export financing or investment loans.

Français: Block credit Español: Crédito de bloque

Blocked Exchange/currency:

A currency which is not freely convertible into other currencies because of government restrictions and regulations. There are generally considered to be three categories of currency: convertible, semi-convertible and non-convertible. The term Blocked currency refers to the latter two categories.

Français: Monnaie non-convertible Español: Tipo de cambio bloqueado, moneda bloqueada

Blue chips:

Shares which have the highest quality ranking as investments, as they carry a lower risk of earnings failure, dividend omissions or bankruptcy of the companies of which they represent a "share", compared with other shares traded on the market. Blue chip status is normally assigned to the shares of large, well-established and creditworthy companies. The word originally meant a diamond chip.

Français: Actions de premier ordre Español: Valor de primera clase, valor de primer orden, acción de primera categoría


A financial security, bearing a fixed interest rate, issued by private businesses or governments as a means of raising money and long-term funds (i.e. borrowing). When an investor buys bonds, he is lending money to the issuer. Bonds are typically issued for periods of several years, usually with fixed nominal interest rate coupons attached to them in bearer form. Bonds may be bought and sold at any time on the secondary market before they are finally redeemed, i.e. repaid at maturity by their issuer.

Français: Obligation Español: Bono, obligación


The holder of the issuer's bonds. In the event of liquidation of a private company, bondholders have priority over shareholders.

Français: Porteur d’obligation Español: Obligacionista

Bond house:

A firm whose primary activity is the business of underwriting, distributing and dealing in bonds.

Page 27: Dictionary of Financial Terms

Français: Société spécialisée en obligations Español: Casa de bonos

Bond issue:

A means of borrowing funds through the issue of fixed-interest, medium-to long-term, securities. Bonds are offered for public subscription during a specified period (subscription period). See also Public offer.

Français: Emission d’obligations Español: Emisión de bonos, emisión de obligaciones

Bonded exchange:

A general term indicating obstacles to free convertibility (for example, of currencies).

Français: Echange restreint Español: Cambio depositado

Bonded Warehouse:

A warehouse authorized by customs authorities for the storage of goods on which payment of duties is deferred until the goods are collected.

Français: Entrepôt en douane Español: Depósito de aduanas, almacén de aduanas, almacén de mercancías bajo control aduanero, almacén general de depósito

Book value:

The value at which assets are reported in a business' financial statements and books of account. Usually, fixed assets are shown at cost less normal depreciation (net book value) while inventories may be considered at cost or market, whichever is lower. The book value of an asset might be more or less than its market value.

Français: Valeur comptable Español: Valor contable, valor en libros

Boom; Bull market:

A significant increase in prices or rates, especially in connection with stock, bond or foreign exchange markets. Opposite: Downturn; slump.

Français: Marché haussier Español: Auge; mercado alcista

Borrower's note:

A written unconditional promise to pay a sum of money at some future date to a named party, on order or on demand.

Français: Promesse inconditionnelle du débiteur Español: Pagaré de prestatario

Page 28: Dictionary of Financial Terms

Brady bonds:

Bonds issued by emerging countries under a debt reduction plan.

Français: Obligations Brady Español: Bonos Brady


An economic entity in a foreign country, incorporated in the home country.

Français: Succursale Español: Branch

Break-even point:

The level at which all the costs sustained are covered. For example, the level of sales at which a project would make zero profit.

Français: Point de seuil Español: Punto de equilibrio de ingresos

Bridge financing:

Interim (temporary) financing provided in an export financing transaction. This financing is subsequently replaced by longer term ECA supported financing.

Français: Financement de relais Español: Financiamiento transitorio, financiamiento puente

Broken-period interest:

Interest payments, accrued since the last due interest date up to a specified date and prior the next due interest date.

Français: Période d’intérêts rompue Español: Interés de período incompleto


An intermediary engaged in trading in a variety of financial instruments, such as foreign exchange, equities, commodities, etc. He executes his clients' orders and charges a fee or commission for the services rendered. Brokers play an important role on the financial markets by bringing together buyers and sellers. Compare with Dealer.

Français: Courtier, Agent de change Español: Corredor, agente de bolsa


A term indicating a situation where the prices of securities move significantly above their true values.

Français: Bulle Español: Burbuja

Page 29: Dictionary of Financial Terms

Buffer stock system:

A method of stabilizing and regulating commodity prices. When a commodity's price falls, buffer stock managers buy it in large quantities in order to steady prices. Purchases are stored in order to be sold off once the price is high again. Stock managers may also hold certain quantities of a commodity in order to meet future unforeseen supply delays, disruptions or unexpected increases in demand. See also Net buyer range and Net seller range.

Français: Système de stock tampon Español: Sistema de reservas de estabilización, sistema de existencias reguladoras

Built-Operate-Transfer (BOT):

A project financing approach which has become very fashionable in recent years. Under a BOT, a government grants the project sponsor a temporary or permanent license to deliver a particular service. Such a license is generally sufficient for the sponsors to raise the necessary funds on a project basis. At the end of the license period granted to a company specifically set up for that purpose, the license or the ownership of the licensed project is handed over to the host government free of charge or at a pre-agreed price.

Français: Built-Operate-Transfer (BOT) Español: Construcción, explotación y transferencia


A market optimist who buys shares, currency, commodities or other traded assets on the expectation that their value will rise, so that he can sell them later at a profit. Opposite: Bear.

Français: Haussier Español: Alcista

Bull-bear bond:

A bond where the repayment of the principal is linked to the market price of another security. Such a bond is issued in two tranches: repayments in the first tranche increase with the price of the reference security, while those in the second tranche decrease with the price of the other security.

Français: Obligation haussière-baissière Español: Bono alcista y bajista

Bulldog bonds:

Bonds issued by foreign borrowers in pounds sterling. Also known as Bulldogs.

Français: Obligations Bulldog Español: Bono bulldog

Bullet bonds:

Bonds with a fixed maturity which may neither be called nor amortized early by the borrower.

Français: Obligations "bullet" Español: Bono con vencimiento único

Bullet loan:

Page 30: Dictionary of Financial Terms

A bank loan or syndicated loan with no amortization, i.e. for which no sinking fund is set up. The borrower pays only interest throughout the life of the loan and at maturity the loan is repaid in a lump sum.

Français: Emprunt "Bullet" Español: Préstamo de amortización (íntegra) al final del plazo, préstamo reembolsable de una sola vez a su vencimiento

Business cycle:

A cycle of periodic and repetitive economic expansion and recession.

Français: Cycle économique Español: Ciclo económico, coyuntura

"Buy Back" deals/Compensation:

See Countertrade.

Français: Opérations de rachat / Compensation Español: Buy-back

Buyer of an option:

See Option.

Français: Acheteur d’une option Español: Buyer of an option

Buyer's credit:

A financial arrangement by which a bank, financial institution or export credit agency in the country of the exporter extends a loan, either directly to the foreign buyer of the exported goods, or indirectly through a bank in the buyer's country acting on his behalf. The credit is thus meant to enable the buyer/importer to make payments due to the supplier/exporter under the contract. It is typically a medium-to long-term loan. Compare with Suppliers' credit.

Français: Crédit acheteur Español: Crédito al comprador

Buyer’s option:

The right of a buyer to modify within a specified period of time one or more of the terms of the contract, as agreed in advance (e.g. purchased quantities, port of discharge, delivery lot size, date of delivery, etc.).

Français: Option de l’acheteur Español: Opción del comprador

Page 31: Dictionary of Financial Terms

C CAC 40 index:

An index based on the daily quotation of 40 major stocks on the Paris stock exchange.

Français: Indice boursier CAC 40 Espa ٌ◌ol: Indice CAC 40

Call …:

(1) Call loans: Credits usually granted to brokers, dealers or investment banks which may be called in by the lender, or repaid by the borrower, at any time without having to give notice.

(2) Call money: Money deposited or borrowed, usually between banks and financial institutions, with an interest rate and no fixed maturity. It can thus be called for repayment by the lending bank on demand, or repaid by the borrower at any time without prior notice.

(3) Call price: The price at which a security can be redeemed when called.

(4) Call option: An Option giving its holder the right, though not the obligation, to purchase a certain number of assets (such as securities, foreign exchange, commodities, etc.) at a predetermined price (strike price) within a specific period of time. A call option will thus be exercised if the spot price goes above the strike price. If it is not exercised within the specified period of time, the option expires. Compare with Put option.

Français: Appeler Espa ٌ◌ol: Call ...

Call Account:

A deposit account, usually interest bearing, from which funds can be withdrawn at call.

Français: Compte courant Espa ٌ◌ol: Call ...

Callable bond:

A bond which the issuer has the right to redeem prior to maturity, by paying some specified call price.

Français: Obligation remboursable par anticipation Espa ٌ◌ol: Bono exigible


In general, the money used to run a business. The term may also be used in a narrower sense to refer to the company's equity or shares (authorized and/or issued), or in some cases to its equity, plus reserves, plus retained profit (also referred to as shareholders funds).

Page 32: Dictionary of Financial Terms

Français: Capital Espa ٌ◌ol: Capital

Capital adequacy:

In banking, this refers to the ratio of a bank's capital resources (share capital plus reserves) to its total deposits. Deductions are made from the former for investments in subsidiaries, goodwill and premises. A high ratio of capital adequacy is generally regarded as an indicator of a financially reliable bank.

Français: Adéquation du capital Espa ٌ◌ol: Nivel de (los) recursos propios

Capital appreciation:

The increase in the value of an asset over a period of time.

Français: Plus value en capital Espa ٌ◌ol: Plusvalيa

Capital appreciation bonds:

These are usually zero-coupon bonds sold Below par.

Français: Appréciation en capital d’obligations Espa ٌ◌ol: Bono de plusvalيa

Capital budgeting:

The evaluation and selection of a company’s planned capital expenditures.

Français: Budget en capital Espa ٌ◌ol: Presupuesto de capital, presupuesto de gastos de capital, presupuesto de inversiones

Capital expenditures:

Expenditure used for the acquisition of long-term fixed assets, such as plant and equipment.

Français: Immobilisations Espa ٌ◌ol: Gastos de capital, desembolso de capital, gastos de inversi َ◌n

Capital exports:

Movements of capital from one country to another. These flows may take a variety of forms, such as direct investments abroad, portfolio investments, grants etc. When the export of capital occurs in response to fears of political risk, and in violation of the regulations on the international transfer of funds, it is referred to as Flight.

Français: Exportations de capitaux Espa ٌ◌ol: Exportaci َ◌n de capital

Capital gains:

Page 33: Dictionary of Financial Terms

The difference between the net price at which a security (shares, bonds etc) is sold and the net cost originally paid to purchase it. If a stock is sold below cost, the difference is a capital loss.

Français: Gains en capital Espa ٌ◌ol: Beneficios y pérdidas de capital

Capital investment loan:

A loan granted to finance the purchase of Fixed assets, i.e. property, plant, machines, equipment, etc.

Français: Prêt destiné à financer des immobilisations Espa ٌ◌ol: Préstamo para inversiones de capital

Capital market:

The financial market where medium- and long-term debt instruments (such as bonds and shares of businesses and public authorities) are traded. Opposite: Money market.

Français: Marché des capitaux Espa ٌ◌ol: Mercado de capitales, mercado del dinero, mercado financiero

Capital mortgage:

A Mortgage to secure a specific credit/transaction.

Français: Hypothèque Espa ٌ◌ol: Hipoteca de capital

Capital ratio:

In banking, this indicates a bank's ratio of equity plus reserves to its total assets. A high ratio implies that the bank has a cushion against bad debts, i.e. the possibility of writing them off against capital.

Français: Ratio de capital Espa ٌ◌ol: Relaci َ◌n entre el capital y los activos

Capital stock (USA):

See Share capital (UK).

Français: Capital de dotation Espa ٌ◌ol: Capital stock (USA)

Capital-output ratio:

A measure of the efficiency of the use of capital. The ratio indicates the amount of capital required to produce a determined level of output. The lower the ratio, the more efficient is the firm or economy. Sometimes the ratio is expressed as the incremental capital-output (ICOR), which measures the increase in the stock of capital of a firm, industry or economy over the increase in output over the same period.

Français: Ratio du capital-production Espa ٌ◌ol: Relaci َ◌n capital-producto, raz َ◌n capital-producto

Page 34: Dictionary of Financial Terms

Capital structure:

The structure of the liabilities and shareholders' equity side of a business' balance sheet, especially the ratio of debt to equity and the proportion of short and long maturities.

Français: Structure du capital Espa ٌ◌ol: Estructura de capital


The debt and/or equity mix of a firm's assets.

Français: Capitalisation Espa ٌ◌ol: Capitalizaci َ◌n


Expenditure which has been recorded in the business’ asset accounts and then depreciated or amortized, as appropriate, for items with a useful life of more than one year.

Français: Capitalisé Espa ٌ◌ol: Capitalized

Capitalized value:

The current value of a future stream of income. To calculate their current value, future payments are discounted at a specific discount rate, so that the further in the future they are due the less they are worth now. The discount rate used is the anticipated interest rate over the period, which indicates the opportunity cost of capital, i.e. the income lost from not having the future payment to invest now.

Français: Valeur capitalisée Espa ٌ◌ol: Valor capitalizado

Capped FRNs:

A Floating Rate Note which pays a normal floating rate note coupon up to a maximum set interest rate. If market rates rise beyond the reference rate, the coupon is fixed at the capped rate. Capped floating rate notes are mainly issued by banks.

Français: Titre à taux d'intérêt variable avec un maximum déterminé Espa ٌ◌ol: Bono de interés flotante con techo, bono de interés variable con techo

Carriage Paid To (CPT):

Carriage Paid To (CPT) and Carriage and Insurance Paid to (CIP) a named destination. Used in place of CFR (Cost and Freight) and CIF (Cost, Insurance and Freight), respectively, for shipment by modes other than water, usually for the inland portion of a shipment.

Français: Port payé Espa ٌ◌ol: Flete pagado hasta, porte pagado hasta

Caribbean Common Market (CARICOM):

A regional trade agreement between 13 English-speaking Caribbean nations.

Page 35: Dictionary of Financial Terms

Français: Marché commun des Caraïbes Espa ٌ◌ol: Mercado Com ْ◌n del Caribe


A freight/transport company operating by air, ocean, road, rail, canal etc. See also inland.

Français: Transporteur Espa ٌ◌ol: Transportista, cargador


An organization of independent producers of goods or services, set up to regulate the production, pricing or marketing practices of its members in order to limit competition and to maximize their market power. The Organization of Petroleum Exporting Countries (OPEC) is among one of the most well known cartels.

Français: Cartel Espa ٌ◌ol: Cلrtel

Cash accounting:

An accounting method which reports expenditures and revenues when the actual cash outflow or inflow has occurred.

Français: Comptabilité "cash" Espa ٌ◌ol: Contabilidad de caja

Cash against documents (CAD):

A method of payment where the title documents to the goods are transferred to the buyer upon payment in cash, usually with the intervention of a commission house or other intermediary.

Français: Paiement "cash" contre présentation des documents Espa ٌ◌ol: Pago contra entrega de documentos

Cash discount:

A reduction, usually expressed as a percentage, in the price of a product or the amount of a bill if payment is made promptly and in cash.

Français: Escompte "cash" Espa ٌ◌ol: Descuento por pago al contado

Cash flow:

The flow of cash payments to or from a firm during a given period of time. Expenditures are sometimes referred to as "negative" cash flows.

Français: Flux de trésorerie Espa ٌ◌ol: Flujo de caja, flujo de efectivo, tesorerيa

Cash in advance (CIA):

Page 36: Dictionary of Financial Terms

A payment method whereby the buyer pays the price of the goods or services in full, prior to the actual shipment of the goods or provision of services. In turn, the seller does not ship the goods or render the services until he has received payment from the buyer. Once the corresponding payment has been made, the seller sends the documents directly to the buyer. Under such a payment method, the seller therefore retains total control over the transaction, with the buyer assuming all the risks (e.g. that the goods ordered and paid for may not be received by the desired date). This technique is usually only used for small purchases or when the goods are built to order. It may also used when the buyer's creditworthiness is doubtful, or when the political or economic environment of his country is unstable, etc. In both Cash in advance and Open account the buyer pays the seller directly, via cheque or money transfer, and the bank's role is limited to moving the funds from buyer to seller.

Français: Avance en liquide Espa ٌ◌ol: Pago por adelantado

Cash market:

The market in which commodities, treasury bills and other debt securities are traded against cash, for immediate delivery.

Français: Marché au comptant Espa ٌ◌ol: Mercado al contado, mercado de productos disponibles

Cash payment:

In international trade transactions, this refers to the portion paid by the importer prior to shipment (usually 15% of the total sales price or invoice value). It is mandatory for the extension of most medium and long-term guarantee/insurance and trade financing facilities.

Français: Paiement cash Espa ٌ◌ol: Pago en efectivo, pago al contado

Cash price:

See Spot price.

Français: Prix cash Espa ٌ◌ol: Mercado de entrega inmediata

Cash with order (CWO):

A payment technique whereby the buyer pays for the goods when ordering them, with the transaction being binding on both parties.

Français: Cash avec ordre Espa ٌ◌ol: Pago al pedido

Category I or II countries:

A classification of countries under the Consensus framework, based on GNP per capita income.

Français: Pays de la catégorie I ou II Espa ٌ◌ol: Paيses de categrيa I o II


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Abbreviation for Certificate of Deposit.

Français: CD Espa ٌ◌ol: CD

Cedel (Centrale de Livraison de Valeurs Mobilières):

A Luxembourg-based, computerized clearing house for Eurobonds.

Français: Cedel Espa ٌ◌ol: Cedel

Centrally Planned Economy:

See Command economy.

Français: Economie planifiée et centralisée Espa ٌ◌ol: Economيa de planificaci َ◌n centralizada, economيa dirigida


(1) A record, attestation, confirmation.

(2) A collective document of title for several shares in an investment fund.

(3) A stock (shares) certificate showing the number of units, par value, voting rights.

Français: Certificat Espa ٌ◌ol: Certificado

Certificate of Deposit (CD):

A money market instrument and negotiable claim, issued by a bank against a short to medium-term deposit (usually for 1-12 months but in exceptional cases up to 5 years). CDs were first created in U.S. dollars but now also exist in other currencies. They can be bought and sold on the secondary market and have become an increasingly important source of funds for banks.

Français: Certificat de dépôt (CD) Espa ٌ◌ol: Certificado de dep َ◌sito

Certificate of inspection:

A document certifying that the merchandise was in good condition immediately prior to shipment or conforms to the original order. Pre-shipment inspection is compulsory for the import of goods into many developing countries.

Français: Certificat de contrôle Espa ٌ◌ol: Certificado de inspecci َ◌n

Certificate of manufacture:

An official statement by the producer of goods that the manufacturing has been completed and that the goods are now at the disposal of the buyer.

Français: Certificats de fabrication Espa ٌ◌ol: Certificado de fabricaci َ◌n

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Certificate of origin:

A document certifying the country of origin of the merchandise exported. Such documents, required by some nations for tariff purposes, are usually obtained through a semi-official organization such as a local chamber of commerce. A certificate may be required even if the accompanying commercial invoice provides such information. See also Rules of origin.

Français: Certificat d'origine Espa ٌ◌ol: Certificado de origen


Abbreviation of Cost and Freight.

Français: C.F.R. Espa ٌ◌ol: C.F.R.

Charges Forward:

A banking term indicating that foreign and domestic bank commissions, interest and government taxes related to the collection of a draft are to be charged to the drawee.

Français: Contre remboursement Espa ٌ◌ol: Gastos a cargo del librado

Chicago Board of Trade:

The first Futures market in the world.

Français: Chicago Board of Trade Espa ٌ◌ol: Consejo de Comercio de Chicago

Chicago Board Options Exchange:

The first Options market in the world.

Français: Chicago Board Options Exchange Espa ٌ◌ol: Consejo de Cambio de Opciones de Chicago

Chicago Mercantile Exchange:

The second largest Futures market in the world.

Français: Chicago Mercantile Exchange Espa ٌ◌ol: Consejo de Intercambio Mercantil

C & I:

Abbreviation of Cost and Insurance.

Français: C & I Espa ٌ◌ol: C & I

Page 39: Dictionary of Financial Terms


Abbreviation of Cost, Insurance and Freight.

Français: C.I.F. Espa ٌ◌ol: C.I.F.

C.I.F. & C.:

Abbreviation of Cost, Insurance, Freight and Commission.

Français: C.I.F. & C. Espa ٌ◌ol: C.I.F. & C.

C.I.F. & E.:

Abbreviation of Cost, Insurance, Freight, and (Currency) Exchange.

Français: C.I.F. & E. Espa ٌ◌ol: C.I.F. & E.

CIP: Carriage and Insurance Paid to

See Carriage Paid To.

Français: Transport et assurance payés à Espa ٌ◌ol: Flete pagado hasta, porte pagado hasta

Circular Letter of credit:

A letter of credit, purchased by a person intending to travel abroad, authorizing him to obtain funds in local currency at any one of a number of listed correspondent banks.

Français: Lettre de crédit circulaire Espa ٌ◌ol: Carta de crédito circular


A combined interest rate and currency swap.

Français: CIRCUS Espa ٌ◌ol: Swap de monedas


See Commercial Interest Reference Rate.

Français: CIRR Espa ٌ◌ol: CIRR

Page 40: Dictionary of Financial Terms


See Convention on Contracts for the International Sales of Goods.

Français: CISG Espa ٌ◌ol: CISG

Claims payments:

Payments made by an Export credit agency after the expiry of the Claims-waiting period on an insured or guaranteed loan, where the original borrower or borrowing-country guarantor has failed to pay. The ECA records such claim payments as unrecovered claims.

Français: Paiements relatifs aux réclamations Espa ٌ◌ol: Pago de una indemnizaci َ◌n

Claims-waiting period:

The period of time exporters or banks must wait after the default of the importer/borrower before the Export credit agency will pay their corresponding claim.

Français: Période d'attente des réclamations Espa ٌ◌ol: Perيodo de carencia

Claused Bill of lading:

A bill of lading on which the carrier has noted some exceptions to having accepted the shipper's merchandise for transport in "apparent good order and condition".

Français: Connaissement clausé Espa ٌ◌ol: Conocimiento de embarque con clلusulas restrictivas, conocimiento de embarque con reservas

Clean bill of lading:

A bill of lading on which the carrier has indicated that the goods were received in "apparent good order and condition", without damages or other irregularities as to the condition of the goods or packaging. Compare with Foul Bill of lading and Claused Bill of lading.

Français: Connaissement net Espa ٌ◌ol: Conocimiento de embarque limpio, conocimiento de embarque sin reservas, conocimiento de embarque sin objeciones

Clean draft:

A draft to which no documents have been attached.

Français: Traite nette Espa ٌ◌ol: Giro sin documentos, letra sin documentos, letra no documentaria

Clean letter of credit:

A letter of credit payable upon presentation of the draft, without any supporting document being required.

Français: Lettre de crédit nette Espa ٌ◌ol: Carta de crédito simple

Page 41: Dictionary of Financial Terms

Clean floating:

The free movement of a currency on the foreign exchange markets, with no intervention by the government or Central Bank. Opposite: Dirty float.

Français: Flottement libre Espa ٌ◌ol: Flotaci َ◌n limpia

Clearing banks:

The commercial banks participating in a Clearing system.

Français: Banques compensatrices Espa ٌ◌ol: Banco de compensaci َ◌n

Clearing Houses:

Also known as Clearing Offices, these are institutions which undertake settlement of the credit/debt positions (stemming from sales of securities and derivatives, bank payments, foreign exchange transactions, etc.) between the members of the Clearing system. Clearing houses play a key role in rationalizing and facilitating the conduct of financial transactions.

Français: Chambre de compensation Espa ٌ◌ol: Cلmara de compensaci َ◌n

Clearing system:

A system set up by a group of financial institutions to settle various payments between themselves. The best known clearing systems are those created for sorting the payment of cheques drawn on one bank and owed to another. Other types of clearing schemes include those for sorting out payments linked to the sale of bonds (such as Cedel, and Euroclear for the sale of Eurobonds).

Français: Système de compensation Espa ٌ◌ol: Sistema de compensaci َ◌n

Clip and strip bonds:

These are bonds whose principal and coupon portions may be split and sold separately.

Français: Obligations à coupon détachable Espa ٌ◌ol: Bonos cortados y separados

Closed-end lease:

A lease contract in which there is no residual value at the end of the lease. See also Leasing.

Français: Crédit-bail à valeur résiduelle nulle à l’échéance Espa ٌ◌ol: Arrendamiento cerrado

Closing accounts:

Page 42: Dictionary of Financial Terms

The balance sheet and profit and loss account (income statement) of a company, prepared at the end of each financial year.

Français: Comptes de bouclement Espa ٌ◌ol: Cuenta de cierre, cuenta compensadora

Closing documents:

The documents designed to complete a business transaction.

Français: Documents de clôture Espa ٌ◌ol: Documento de cierre

Club of Paris:

See Paris Club.

Français: Club de Paris Espa ٌ◌ol: Club of Paris

Club of ten:

See Group of ten.

Français: Club des dix Espa ٌ◌ol: Club of ten


A general term indicating the joint financing of large projects. With specific reference to developing countries, cofinancing is usually provided for large infrastructure type projects in the form of loans or grants by several lenders, including commercial banks, the World Bank or other multilateral agencies and export credit agencies or other financial institutions.

Français: Cofinancement Espa ٌ◌ol: Cofinanciamiento, cofinanciaci َ◌n


Literally, "at the side". The term refers to assets pledged as security for a credit, lease or other commitment or liability. Collateral usually takes the form of assets readily convertible into cash, such as merchandise, bonds, shares, etc. See also Pledge.

Français: Garantie Espa ٌ◌ol: Garantيa (prendaria)

Collateral bonds:

An American term, to indicate those bonds which are secured by collateral, such as the pledging of mortgages (collateral mortgage bonds).

Français: Obligations garanties Espa ٌ◌ol: Bono garantizado

Page 43: Dictionary of Financial Terms

Collateral loan (USA); Lombard loan (UK):

Advances made against the pledging of collateral.

Français: Prêt garanti (USA) ; Prêt-Lombard (GB) Espa ٌ◌ol: Préstamo con garantيa prendaria


(1) The presentation for payment of any obligation, bill of exchange, draft or other instrument

(2) A payment arrangement whereby the seller ships the goods and draws a bill of Exchange (draft) on the buyer. The Collection papers are then sent to the seller's bank with clear instructions for collection through one of its correspondent banks, located in the country of the buyer. Usually, the title to the goods does not pass to the buyer (unless the buyer is indicated as Consignee on the transport document) until the buyer has paid or accepted the draft. Collections are an alternative payment arrangement to Open account or Cash in advance. They are usually used in connection with the sale of goods rather than the provision of services. See also Documentary Collection.

Français: Encaissement Espa ٌ◌ol: Recaudaci َ◌n, cuestaci َ◌n, colecta, cobranza, cobro

Collection papers:

All documents (invoices, Bill of lading, etc.) submitted to a buyer in order to receive the payment for a shipment.

Français: Effets destinés à l'encaissement Espa ٌ◌ol: Documento de cobranza

Command economy; centrally planned economy:

An economy where resources, investment, jobs etc. are allocated and controlled by government decision.

Français: Economie dirigiste, Economie centralement planifiée Espa ٌ◌ol: Economيa de planificaci َ◌n centralizada, economيa dirigida

Commercial bill:

A Bill of exchange which finances a short-term self-liquidating commercial transaction, as for the export of goods.

Français: Effet commercial Espa ٌ◌ol: Efecto de comercio

Commercial Interest Reference Rate (CIRR):

A market interest rate, for a specific currency and a specific country for officially supported export loans, set under the Consensus.

Français: Taux d'intérêt de référence commercial Espa ٌ◌ol: Tasa de interés comercial de referencia, tipo de interés comercial de referencia

Commercial invoice:

An accounting document (bill) by which the seller claims payment from the buyer for the value of the goods and/or services supplied. It is prepared by the seller and gives a description of the merchandise, its price, etc. Commercial invoices are also often used by the government to determine the true value of goods, to assess the applicable custom

Page 44: Dictionary of Financial Terms

duties and to prepare consular documentation. In this case, the government of the country of import specifies the form, content, number of copies, language and other characteristics of the invoice to be drawn up.

Français: Facture commerciale Espa ٌ◌ol: Factura comercial

Commercial paper:

This is a form of Promissory note backed by standby Letters of credit. The term applies to notes and acceptances with a specified maturity date received by a business enterprise in payment for goods sold or services rendered. Commercial papers are widely used in the United States as a reliable source of short-term financing. When rolled forward they can also be used to satisfy longer-term financing needs.

Français: Effets de commerce Espa ٌ◌ol: Efecto mercantil, efectos comerciales

Commercial register:

An official register of companies engaged in a trade, manufacturing or other type of business based on commercial principles.

Français: Registre du commerce Espa ٌ◌ol: Registro comercial

Commercial risk:

The risk of non-payment by a non-sovereign or private-sector buyer or borrower arising from default, insolvency and/or failure to accept and collect the goods which have been shipped according to the supply contract. Compare with Transfer risk and Political risk.

Français: Risque commercial Espa ٌ◌ol: Riesgo comercial

Commercial Risk Coverage:

An insurance policy or guarantee cover which gives protection to the supplier or a financing bank against losses linked to the verification of a Commercial risk. The specific events covered vary with the policy and the insurance agency. For example, ECAs will not generally cover non-payment due to disputes between the parties to the contract (e.g. over product quality, supplier performance, etc.).

Français: Couverture du risque commercial Espa ٌ◌ol: Cobertura de riesgo comercial


Compensation paid for work performed, usually based on the volume of the transaction or calculated as a percentage of the profit. See also Bank commission.

Français: Commission Espa ٌ◌ol: Comisi َ◌n

Commission agent:

A middleman (such as Broker) who sells the goods without taking title to them, in exchange for a Commission.

Page 45: Dictionary of Financial Terms

Français: Commission d'agent Espa ٌ◌ol: Comisionista

Commission house:

A firm which buys and sells actual commodities or futures contracts on behalf of its clients, in return for charging a commission.

Français: Agence de courtage Espa ٌ◌ol: Casa comisionista


The date on which, under the contract terms, the plant or equipment supplied should have been completed according to specification.

Français: Mise en exploitation Espa ٌ◌ol: Comisionada


A general term indicating the existence of an obligation.

(1) In the credit insurance business, the firm obligation by an Export credit agency to lend, guarantee or insure a credit according to specified terms, conditions and purposes, for the benefit of a specific importer, as stated in an agreement or equivalent contract.

(2) In the credit business, the credit obligation assumed by a bank, arising from a loan contact or loan contracts, towards a specific customer or borrowing country.

(3) In the securities trade, the obligation arising from new purchases of securities.

Français: Engagement Espa ٌ◌ol: Compromiso

Commitment commission; Commitment commission supplier's fee:

A fee charged by a bank or the supplier of capital goods, payable quarterly or bi-annually, for credit lines granted but not used during the specified period of time.

Français: Commission d'engagement; Commission d'engagement du fournisseur Espa ٌ◌ol: Comisi َ◌n de compromiso; comisi َ◌n de compromiso de proveedores de recursos

Commitment fee:

(1) A fee paid (usually on a bi-annual or quarterly basis) by the borrower to compensate his bank for engaging funds under a specific loan agreement, i.e. the fee on the available but undrawn portion of the financial arrangement. The fee is usually a fraction of 1 per cent of the funds committed.

(2) A charge by the forfaiter to agree to forfait a transaction and hold a Discount rate for a specified period of time. The commitment fee will be applied from the date the commitment is made until the date of disbursement or payment.

Français: Commission d'engagement Espa ٌ◌ol: Comisi َ◌n de compromiso, comisi َ◌n de disponibilidad

Page 46: Dictionary of Financial Terms


An accounting term used within the credit insurance business, indicating the total amount of loans provided and outstanding plus loans guaranteed or insured by an Export credit agency. Commitments usually include the principal and the interest due from the importing country on disbursed and undisbursed credits. Sometimes they include not only the agency's liabilities but also the uninsured parts of the loans. Thus, for an export credit agency, its commitments are almost always larger than its total Exposure.

Français: Engagements Espa ٌ◌ol: Compromiso

Committed loan facility:

A legal commitment by a bank to lend to a customer, for instance in the form of a line of credit.

Français: Engagement de facilité de prêt Espa ٌ◌ol: Facilidad de crédito comprometida


Raw materials or primary products (such as tin, coffee, tea, sugar, wool, cotton, rubber, silver, cocoa, etc.) which investors buy and sell, and on which derivatives are often created.

Français: Marchandise, Produit Espa ٌ◌ol: Producto bلsico, materia prima, mercancيa, mercaderيa, producto primario

Commodity bonds:

Bonds whose interest rates or par value is tied to the market price of a specific commodity.

Français: Obligations basées sur des marchandises Espa ٌ◌ol: Bono indizado seg ْ◌n el precio de un producto bلsico, bono indexado a productos

Commodity Fund:

An Investment fund investing mainly in commodity bills and securities, such as grain contracts.

Français: Fonds basés sur marchandises Espa ٌ◌ol: Fondo de productos bلsicos

Commodity linked swap; Commodity price swap:

A financial instrument working essentially as an interest rate swap, but whose payments are based on a commodity price index rather than an interest rate index. In a basic commodity price swap, two parties periodically exchange cash payments during a specified period of time. A fixed price payment is typically exchanged against a fluctuating or market price payment, based on the market price of the underlying commodity.

Français: Opération de change Swap liée à une marchandise; Opération swap liée au prix d’une marchandise Espa ٌ◌ol: Swap basado en productos bلsicos

Commodity swaps:

The exchange of a commodity in its raw form against receipt of the relative refined product (for instance raw sugar in exchange for refined sugar).

Page 47: Dictionary of Financial Terms

Français: Opérations swap sur matière première Espa ٌ◌ol: Swap de materia prima

Common equity:

The value of the ordinary shares/common stock issued by a firm.

Français: Valeur des actions ordinaires Espa ٌ◌ol: Capital bلsico

Common stock:

A US term indicating those securities which represent the ownership of a corporation. They have a discretionary dividend and do not have priority over other types of shares with regard to dividend payments. They are usually the only class of shares which give a voting right at shareholders' meetings. They are known as ordinary shares in the United Kingdom. Compare with Preferred stocks or Preference Shares.

Français: Action ordinaire Espa ٌ◌ol: Acciones ordinarias

Compensating balance:

A deposit account which the bank may require its borrowers to put at its disposal.

Français: Solde compensatoire Espa ٌ◌ol: Saldo compensatorio

Compensation (Buyback):

See Countertrade.

Français: Indemnisation, Dédomagement (Rachat) Espa ٌ◌ol: Compensacيon

Compensatory financing facility:

A special fund set up by the IMF, to assist member countries experiencing balance of payments problems due to temporary falls in the price of the basic commodities which they export and on which they are largely dependent.

Français: Facilité de financement compensatoire Espa ٌ◌ol: Servicio de financiamiento compensatorio

Compensatory Trade:

Any kind of arrangement by which goods and services are bartered.

Français: Commerce compensatoire Espa ٌ◌ol: Comercio compensatorio

Competitive bidding:

A purchase process whereby the buyer asks potential suppliers to submit competing bids.

Page 48: Dictionary of Financial Terms

Français: Appels d'offres Espa ٌ◌ol: Licitaci َ◌n p ْ◌blica, concurso p ْ◌blico

Completion Guarantee:

A guarantee, usually provided by the contractor or another responsible party through a Performance bond, undertaking that the project will be completed by a certain date and will operate at a specified output or efficiency level.

Français: Garantie d'achèvement Espa ٌ◌ol: Garantيa de terminaci َ◌n

Completion risk:

The risk that the project will not be fully completed or constructed on time, or that it will be delivered with design or technical deficiencies which will not allow it to function properly. This risk may be reduced through the issue of a Completion guarantee.

Français: Risque d'achèvement Espa ٌ◌ol: Riesgo de terminaci َ◌n

Compound duties:

See duty.

Français: Droits composés Espa ٌ◌ol: Arancel compuesto

Compound interest:

The interest rate on a loan calculated not only on the original principal of the loan but also on the accrued interest (i.e. interest accrued on previous due interest added to the principal). Over time interest charges will therefore grow exponentially. For instance, a £100 loan earning compound interest of 10% per annum will accumulate to £110 by the end of the first year, £121 by the end of the second year, etc. Compare with Simple interest.

Français: Intérêt composé Espa ٌ◌ol: Interés compuesto

Compound value:

The final value of a sum earning Compound interest.

Français: Valeur composée Espa ٌ◌ol: Valor compuesto

Comprehensive coverage:

See Whole turnover coverage.

Français: Couverture complète tous risques Espa ٌ◌ol: Comprehensive coverage

Page 49: Dictionary of Financial Terms

Concessional funds/loans:

Sometimes referred to as Soft loans, these are a form of finance for borrowers provided by financial institutions at interest rates below market rates, where the interest differential is usually covered by a government subsidy to the financial institutions involved.

Français: Fonds ou prêts subventionnés Espa ٌ◌ol: Préstamo en condiciones favorables

Concessionality level:

A measure of the degree of concessionality of a credit offered at below-market interest rates or partially as a grant. The participants to the OECD Consensus have agreed on common methods for the calculation of concessionality. See also Grant element.

Français: Niveau de subvention Espa ٌ◌ol: Nivel de concesiones


A written statement by a business to acknowledge its involvement in a specific deal. For instance, any transaction on the securities' market should be followed by a confirmation spelling out the settlement date, terms, commission, etc.

Français: Confirmation Espa ٌ◌ol: Confirmaci َ◌n

Confirmed Letter of credit:

A letter of credit to which the bank in the exporter's country has added its confirmation, implying that the exporter will be paid even in the event of default by the foreign buyer and/or the foreign bank.

Français: Lettre de crédit confirmée Espa ٌ◌ol: Carta de crédito confirmada

Confirming service:

A financial service, offered by an independent agency in the exporter's country, which confirms the overseas buyer’s order and makes payment for the goods in the currency of the exporter. It is mainly used in Europe and allows for the smooth co-ordination and full payment of the export transaction. The items eligible for confirmation include the exported goods, inland, air and ocean transportation costs, forwarding fees, custom brokerage fees and duties.

Français: Service de confirmation Espa ٌ◌ol: Confirmante

Confirming bank:

This is frequently the same institution as the Advising bank. The confirming bank will add its commitment to that of the issuing bank to pay the beneficiary of a Letter of credit, provided that all the documents are in order.

Français: Banque confirmatrice Espa ٌ◌ol: Banco confirmante

Confirming house:

Page 50: Dictionary of Financial Terms

A private independent company whose business is the Confirmation of short- or medium-term obligations of foreign importers towards exporters under a Letter of credit or another type of deferred payment arrangement. The confirming house will confirm the importer's orders to the manufacturer, either by guaranteeing payment or by undertaking to pay on behalf of the importer for whom it acts as agent. Confirming houses extensively rely on credit insurance extended by Export credit agencies to mitigate the risks inherent in their business.

Français: Organisme confirmateur Espa ٌ◌ol: Comisionista


A company involved in two or more unrelated businesses, often with the aim of diversifying its operations and sources of income and thus reducing risks. Conglomerates usually consist of a group of firms owned by a Holding company, acting as the "umbrella" organization in which all shares are vested.

Français: Conglomérat Espa ٌ◌ol: Conglomerado


Formally named the "Arrangement on Guidelines for Officially Supported Export Credits", it consists of a framework of rules governing Export credits agreed by the members of the OECD's export credit group. The Consensus guidelines set the minimum interest rates allowed on officially supported export credits, maximum repayment terms, notification procedures when the guidelines are exceeded and the terms under which supplier and buyer credits can be made available to overseas customers.

Français: Consensus Espa ٌ◌ol: Acuerdo


The person, firm or representative named in a freight contract to whom the shipped goods are to be delivered and turned over at a particular destination. For export control purposes, the nature of the consignee may be differentiated between intermediate and ultimate consignee.

Français: Consignataire Espa ٌ◌ol: Destinatario, consignatario, receptor


A sale arrangement whereby the exporter (consignor) delivers the merchandise to an agent (consignee) under an agreement that the agent will sell it for the account of the exporter. Under this kind of arrangement, the consignor/exporter retains title to the goods until thy are sold, while the consignee/agent sells the goods in exchange for a Commission and remits the net proceeds to the consignor.

Français: Consignation Espa ٌ◌ol: Consignaci َ◌n


The seller or shipper of merchandise.

Français: Consignateur Espa ٌ◌ol: Expedidor, remitente, cargador

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Consolidated debt:

A long-term, funded debt of a public authority (e.g. bond issue). Opposite: Floating debt.

Français: Dette consolidée Espa ٌ◌ol: Deuda consolidada


(1) With reference to government debt, the term indicates the conversion of outstanding short-term debts into fixed, long-term debts.

(2) Within a stock exchange, the term refers to the stabilisation of price levels on the stock exchange following a downturn.

(3) When relating to a holding, the term indicates the process of combining and merging the

separate balance sheets of the companies belonging to the group into one single consolidated balance sheet.

Français: Consolidation Espa ٌ◌ol: Consolidaci َ◌n

Consortium bank:

A bank set up and owned by a group of other banks, with no one of them holding a majority share. The participants of the consortium may or may not be of the same nationality. Consortium banks are common in the Euromarket and are active in loan Syndication.

Français: Banque du consortium Espa ٌ◌ol: Banco consorcial

Consortium project:

A project structured by two or more parties as a partnership or Joint venture.

Français: Projet de consortium Espa ٌ◌ol: Proyecto en consorcio

Construction Loan:

See Contractor loan.

Français: Prêt à la construction Espa ٌ◌ol: Construction loan

Consular declaration:

A formal statement addressed to the consul of the foreign country of export, describing the goods to be shipped. The approval of the consul must be obtained before shipment.

Français: Déclaration consulaire Espa ٌ◌ol: Declaraci َ◌n consular

Consular documents:

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Documents such as Bills of lading, Certificates of origin or special Consular invoice forms which need to be officially signed by the consul of the country of destination of a shipment.

Français: Documents consulaires Espa ٌ◌ol: Documentos consulares

Consular invoice:

A document, required by some countries, which provides information on the shipment of goods (e.g. consignor, consignee, value of the shipment, etc.). It needs to be certified by a consular official of the country of export and is then used by the local customs officials to verify the value, quantity and nature of the shipment.

Français: Facture consulaire Espa ٌ◌ol: Factura consular

Consumer credit:

A credit, granted by a firm to its clients, for the purchase of goods or services. Also known as retail credit.

Français: Crédit à la consommation Espa ٌ◌ol: Crédito al consumo, crédito al consumidor

Consumer durables:

Goods, purchased by individual consumers, which are supposed to have a relatively long "life", such as cars, domestic appliances etc., as opposed to consumer goods.

Français: Biens durables Espa ٌ◌ol: Bienes de consumo duraderos


A condition in the commodity market when Spot prices are lower than Futures prices. This happens because investors expect commodity prices to rise or remain stable (even with stable prices futures prices will always be slightly higher than spot ones to cover interest costs). Opposite: Backwardation.

Français: Report Espa ٌ◌ol: Contango

Contingent claim:

A claim which can only be made if one or more of the specified outcomes occur.

Français: Réclamation liée conditionnelle Espa ٌ◌ol: Tيtulo de crédito eventual

Contingent liability:

A possible future liability, i.e. a liability which becomes such only if some event occurs. For example, a guarantor becomes liable for his guarantee only if the debt he has guaranteed goes unpaid by the debtor.

Français: Engagement conditionnel Espa ٌ◌ol: Pasivo contingente, obligaci َ◌n contingente

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Contract bond:

A bond or guarantee, provided by a bank to an overseas importer to cover him against possible negative events.

Français: Obligation contractuelle Espa ٌ◌ol: Fianza de contratista


Within a project, the company responsible for the engineering, procurement and construction activities of the project.

Français: Entrepreneur Espa ٌ◌ol: Contratista

Contractor loan:

A loan extended to a building contractor or craftsman providing him with the necessary Working capital (to cover salaries, materials and any other periodic production costs). The borrower will subsequently repay the equivalent amount of the loan by using the proceeds of the Permanent financing or the operating revenues at the completion of the project. The term can also be used to refer to a loan facility provided by the building contractor.

Français: Prêt de construction Espa ٌ◌ol: Préstamo a contratistas

Convention on Contracts for the International Sales of Goods (CISG):

A UN convention establishing uniform legal rules for the drafting of international goods sales contracts and covering the rights and obligations of the parties. The CISG applies automatically to all sales contracts between traders from two countries which have both ratified the CISG, unless the parties to the contract explicitly exclude all or part of the CISG or expressly state that they wish to be governed under a law other than the CISG.

Français: Convention relative aux contrats de ventes internationales de biens Espa ٌ◌ol: Convenci َ◌n sobre los Contratos de Compraventa Internacional de Mercaderيas, Convenci َ◌n de Viena sobre Compraventas


(1) Debt restructuring and refinancing, i.e. the replacement of old obligations or debt instruments with new bonds or instruments of the same company or institution, but on different terms and conditions (a typical example is the conversion of Debentures into equity in the restructuring of public companies).

(2) The Renewal of a bank-issued medium-term loan.

(3) The exchange of Convertible bonds into shares.

(4) In the foreign exchange sector, the exchange of a credit balance or claim expressed in one currency into a balance or claim in another currency.

Français: Conversion Espa ٌ◌ol: Conversi َ◌n

Conversion ratio:

The number of Ordinary shares/Common stock which the security holder will receive if he decides to exercise the option of a convertible security (such as a Convertible bond).

Page 54: Dictionary of Financial Terms

Français: Rapport de conversion Espa ٌ◌ol: Relaci َ◌n de conversi َ◌n


The freedom to exchange one currency into another without government restrictions or controls.

Français: Convertibilité Espa ٌ◌ol: Convertibilidad


Loans, preference shares or debentures which carry the option of conversion at a predetermined future date, into cash in the case of a loan, or into ordinary shares for preference shares or debentures.

Français: Convertible Espa ٌ◌ol: Convertible

Convertible bond; convertibles:

Bonds issued by a corporation which may be converted into the corporation's Common stock/Ordinary shares within a specified time period and at a specific price, at the option of the holder.

Français: Obligation convertible, convertibles Espa ٌ◌ol: Bono convertible

Convertible currency:

A currency which can be bought and sold for another currency at will.

Français: Monnaie convertible Espa ٌ◌ol: Moneda convertible

Convertible loan stock:

Long-term debts/debentures/bonds, which are convertible, at some future date and at the option of the lender, into equity, i.e. Ordinary shares/Common stock of the borrowing company.

Français: Prêt convertible en actions Espa ٌ◌ol: Préstamo de acciones convertibles

Convertible preferred stock:

Preferred shares which may be converted into Common/Ordinary shares of the issuing company, at the option of the holder.

Français: Action privilégiée convertible Espa ٌ◌ol: Acciones preferentes convertibles

Corporate bonds:

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Debt obligations issued by private corporations, typically paying bi-annual Coupons and whose Face value is repaid at the bond's maturity.

Français: Obligations de la société Espa ٌ◌ol: Bono empresarial

Corporate finance:

Financial transactions undertaken by a corporation.

Français: Financements de société Espa ٌ◌ol: Finanzas empresariales

Corporate tax:

A tax on company profits.

Français: Taxe sur les sociétés Espa ٌ◌ol: Impuesto sobre las sociedades (de capital)


A legal entity which is separate and distinct from its owners, set up for the conduct of economic activities.

Français: Société Espa ٌ◌ol: Sociedad de capital

Correspondent Bank:

A bank which, within its own country, handles the business of a foreign bank, i.e. receives and makes money payments in addition to rendering other services on behalf of the foreign bank. A bank's accounts held with a correspondent bank are known as Nostro account. Correspondent banks play an essential role in the smooth conduct of foreign trade and financial transactions.

Français: Banque correspondante Espa ٌ◌ol: Banco corresponsal

Cosmetic interest rates:

The term refers to interest rates, below market rates, which are specified in some government contracts, without however entailing a Grant element. These rates are sought by some borrowing countries and are "cosmetic" because in reality exporters compensate for the lower interest rate by raising the value of the export contract.

Français: Taux d'intérêts cosmétiques Espa ٌ◌ol: Tipo de interés cubierto

Cost and freight (CFR):

A pricing term used in the foreign trade of goods through ocean shipment. It indicates that all the expenses for shipment and freight up to the port of destination are included in the quoted price of the goods. The cost of insurance however is left to the buyer's account. When the export is conducted through modes other than ocean shipment, the term used is Carriage paid to (CPT).

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Français: Coût et fret Espa ٌ◌ol: Costo y flete, C y F

Cost and Insurance:

A pricing term indicating that these costs are already included in the quoted price, i.e. covered by the seller.

Français: Coût et assurance Espa ٌ◌ol: Costo y seguro

Cost-Insurance-freight (CIF):

Under this term, the price of the goods quoted by the seller includes the cost of insurance, transport and other miscellaneous charges sustained until the point of debarkation from the vessel. When the goods are transported through modes other than ocean shipments, the term used is Carriage and insurance paid to (CIP).

Français: Coût assurance fret (CIF) Espa ٌ◌ol: Costo, seguro y flete (CIF)

Cost, Insurance, Freight and Commission:

A pricing term indicating that all these costs are included in the quoted price by the seller, i.e. covered by him.

Français: Coût, assurance fret et commission Espa ٌ◌ol: Costo, seguro, flete y comisi َ◌n

Cost, Insurance, Freight and Currency Exchange:

A pricing term indicating that these costs are included in the quoted price (i.e. covered by the seller).

Français: Coût, assurance, fret et change monétaire Espa ٌ◌ol: Costo, seguro, flete y cambio

Cost of funds:

In general this is the interest rate associated with borrowing money. It is also used as the basis for the loan pricing, i.e. the determination of the interest rate charged on the loan, particularly when the source of funding is uncertain or includes Reserve assets costs. In the case of a commercial bank, the cost of funds for a loan is the Offered rate, i.e. the interest rate which the bank has to pay another bank to borrow funds. See also LIBOR, PIBOR.

Français: Coût des fonds Espa ٌ◌ol: Costo de fondos

Cost of Production (COP):

This refers to the sum of the cost of raw materials, components and other inputs used in the production of goods, including an appropriate allocation for general administrative and selling expenses. COP does not include any mandatory minimum general expense or profit.

Français: Coût de production Espa ٌ◌ol: Costo de producci َ◌n

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Costs of manufacture (COM):

Within a Dumping investigation, the costs of manufacture are calculated as the sum of the manufacturing inputs (materials, labour, etc.) plus both the direct and indirect overhead expenses required to produce the merchandise under investigation.

Français: Coût de fabrication Espa ٌ◌ol: Costo de manufactura

Counter Credit:

A variation of Back-to-back credit whereby a second bank (usually that of the original beneficiary) issues a separate letter of credit in favour of the second beneficiary.

Français: Contre-crédit Espa ٌ◌ol: Contracrédito


An irrevocable commitment by the exporter that he will repay the bank if a Performance bond or a Down-payment bond is called.

Français: Contre-indemnité Espa ٌ◌ol: Contraindemnizaci َ◌n


See Countertrade.

Français: Contre-achat Espa ٌ◌ol: Compra de contrapartida


A means of trading, whereby the exporter is required to accept goods or other instruments of trade in part or whole payment for his sales. This allows the buying country to save foreign currency. Countertrade is thus used by countries experiencing foreign exchange shortages. Countertrade may take different forms, including barter, buy-back or compensation, counterpurchase, offset requirements, swap, switch, evidence or clearing accounts. As a means of payment, countertrade is not encouraged by international and multinational financial institutions as the price setting mechanisms underlying such transactions frequently lack transparency.

(1) Barter is the oldest and simplest method of countertrade by which goods are exchanged against other goods of equivalent value. It is the only way of undertaking trade with no or little money involved. As it does not involve the use of money, it is often used by countries with Blocked currencies.

(2) Counterpurchase is one of the most common forms of countertrade. Under this arrangement, the exporter undertakes to buy goods from the importer or from a company nominated by the importer, or agrees to arrange for their purchase by a third party, within a specific period (usually one-to-five years). Both parties pay for their purchases in cash (at least in part) but commit themselves, by signing a "protocol" contract, to fulfil the purchase counter obligation. The goods being sold in exchange are typically unrelated but may be equivalent in value.

(3) In offset, the exporter agrees to use goods produced in the importer's country as an input of the products being sold, and up to an agreed percentage of the original sale. In a direct offset, the exported goods are an integral part of the final product, and the agreement involves a co-production arrangement based on the transfer of production technology to the importing country. In an indirect offset the selling country agrees to purchase unrelated products from the importing country.

(4) In a compensation or buy-back deal, exporters of equipment, technology, or even entire plants, agree to purchase a certain percentage of the output of the facility as payment

Page 58: Dictionary of Financial Terms

(5) Switch is a complex form of barter, involving a chain of buyers and sellers in different markets and countries, based on the multilateral clearance of bilateral trade imbalances. A specialized countertrade house will typically buy (at a discount) from country A the value of its bilateral trade surplus with country B, and sell it at full value to company or country C, which has a bilateral trade deficit with party A. The trading house will often have to take title to certain goods, which it then has to sell against hard currency.

Français: Commerce d’échange Espa ٌ◌ol: Comercio de compensaci َ◌n

Countervailing duty:

An additional duty, imposed by a country on imported goods, to counter subsidies granted to the exporters of the goods by their domestic governments. Such duty is allowed by the GATT rules, provided that the importing country can prove that the subsidy would directly injure the domestic industry.

Français: Droit compensateur Espa ٌ◌ol: Derecho compensatorio

Country of export destination:

The country where the exported goods are to be consumed or further processed, as known to the shipper at the time of export. If the shipper is not aware of the country of final destination of the merchandise, the shipment is attributed to the last known country of delivery.

Français: Pays de destination de l’exportation Espa ٌ◌ol: Paيs de destino de las exportaciones

Country risk:

The general level of political and economic uncertainty in a country. It is the risk of lending to the most creditworthy borrower in that country, namely of investing in securities issued by the national government. In general, banks must assess the economic and financial conditions of the country in which a potential borrower resides. Shortages of foreign exchange are a typical element of country risk which might prevent repayment of the loans.

Français: Risque pays Espa ٌ◌ol: Riesgo paيs

Country risk categories:

Used by all Export credit agencies to rank borrowing countries according to their perceived creditworthiness, i.e. their Country risk. Each agency has a different number of risk categories. In general, "category one" countries are those considered as presenting the lowest country risk.

Français: Catégories de risque pays Espa ٌ◌ol: Categorيa de riesgo paيs


The periodic interest payment made to the holders of a Bond during the life of the bond. The coupon may be physically cut off the bond and sent to the authorized paying agent when due for payment.

Français: Coupon Espa ٌ◌ol: Cup َ◌n

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Coupon Rate:

The stated interest rate payable on a Bond, paid at least once a year.

Français: Taux du coupon Espa ٌ◌ol: Interés nominal


A loan covenant is an undertaking by the borrower to perform certain acts (affirmative covenant), such as providing timely financial statements to the lender, or to refrain from certain acts (negative covenant), such as incurring further debts beyond the agreed level.

Français: Convention Espa ٌ◌ol: Compromiso de crédito, contrato de préstamo, garantيa de préstamo


A general term for the techniques which may be used by a business to manage and control risks. In international trade transactions this may be achieved through the issue of an export credit guarantee/insurance, against the risk of non-payment or of payment delays. In this case, cover is usually, though not always, provided both for Commercial risk and Political risk. Cover is not usually provided for the full value of the due payments but is typically between 90% and 95% of the contract value.

Français: Couverture Espa ٌ◌ol: Cobertura

Covered option:

An option where the option writer owns the underlying stock represented by the option contract. A covered option limits the risk the writer takes because the stock does not have to be bought at the market price, if the holder of that option decides to exercise it.

Français: Option couverte Espa ٌ◌ol: Valor con moneda de reembolso opcional


See Carriage Paid To.

Français: CPT Espa ٌ◌ol: CPT


A general term for money loaned.

(1) The ability to borrow money on the promise of future repayment.

(2) In accounting, an entry made on the liabilities’ side of an account.

(3) In finance, an amount loaned to a borrower.

Français: Crédit Espa ٌ◌ol: Crédito

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Credit agreement:

A contractual document by which the bank or another lender grants a client the loan he has applied for.

Français: Contrat de crédit Espa ٌ◌ol: Acuerdo de crédito, contrato de crédito

Credit commission:

A fee charged by the bank, in addition to the interest rates, to compensate for special services or as a risk premium for the loans being extended. See also Bank commission.

Français: Commission de crédit Espa ٌ◌ol: Comisi َ◌n de crédito

Credit history:

Past repayment performance.

Français: Historique du crédit Espa ٌ◌ol: Antecedentes crediticios

Credit line:

See line of credit.

Français: Ligne de crédit Espa ٌ◌ol: Lيnea de crédito

Credit memorandum:

A written agreement by which the bank grants its client a credit or a line of credit.

Français: Memorandum de crédit Espa ٌ◌ol: Nota de crédito

Credit rating:

See Rating.

Français: Notation de crédit Espa ٌ◌ol: Credit rating

Credit risk insurance:

Insurance designed to cover the risks of non-payment of a credit.

Français: Assurance du risque de crédit Espa ٌ◌ol: Seguro contra el riesgo de crédito

Credit overdrawing:

The drawing of funds beyond the agreed limit or Line of credit. See also Overdraft.

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Français: Dépassement de crédit Espa ٌ◌ol: Giro de crédito en descubierto

Creditor clubs:

See Paris club, London club.

Français: Clubs créanciers Espa ٌ◌ol: Club de Parيs, Club de Londres

Creditworthiness; Credit solvency:

The ability to repay loans and debts and, in general terms, the financial strength of a company or a person. It is also determines the Rating of a company or a government placing a bond issue.

Français: Solvabilité Solvabilité du crédit Espa ٌ◌ol: Solvencia, capacidad crediticia

Cross-border loans:

Typically, this refers to a situation when a bank in one country lends to a borrower in another country. The term may also refer to a Syndicated loan granted by a group of banks from one or more countries for the financing of a project or a borrower in another country.

Français: Prêts transfrontaliers Espa ٌ◌ol: Préstamo internacional

Cross-currency loan:

A loan extended by a bank in one country to a borrower either in the same country or in a second country, where the currency denomination of the loan is that of a third country.

Français: Prêt monétaire croisé Espa ٌ◌ol: Préstamo entre dos o mلs monedas


The practice of Hedging a risk by buying or selling a futures contract which is similar but different from the underlying contract being hedged.

Français: Protection croisée Espa ٌ◌ol: Coberturas cruzadas

Cross rate:

An exchange rate between two currencies, calculated as the ratio of the two foreign exchange rates in relation to a third currency, i.e. by pricing the two currencies against a third. e.g.: USD 1 = CHF 1.4900 and USD 1 = DM 1.7950 equals DM 100 = CHF 83.00.

Français: Taux croisés Espa ٌ◌ol: Tipo cruzado

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Cum dividend:

"With dividend". The purchaser of "cum div" shares or stocks is entitled to the dividend on the next-payment day. i.e. the purchased shares or stocks are sold together with the right to collect the dividend, which has been announced but not yet distributed. Shares and stocks are usually sold "cum div". The opposite "ex div" means that the buyer has purchased them too late to have the right to that year's dividends.

Français: Avec dividende Espa ٌ◌ol: Con dividendo

Currency option:

The right, though not the obligation, to purchase a specified amount of foreign currency at a predetermined rate and at a specified future date. See Option.

Français: Option monétaire Espa ٌ◌ol: Opci َ◌n de cambio

Currency parity:

See Parity.

Français: Parité monétaire Espa ٌ◌ol: Paridad cambiaria

Currency risk (post-contract or post-natal):

The risk of an unfavourable evolution of the foreign exchange rate, between the time a contractual decision (purchase/sale) has been taken and the time the corresponding foreign currency is bought/sold on the foreign exchange market.

Français: Risque monétaire (postérieur au contrat ou post-natal) Espa ٌ◌ol: Riesgo cambiario posterior al contrato

Currency risk (pre-contract or ante-natal):

The risk of an unfavourable evolution of the foreign exchange rate between the time of the pricing decision of a transaction involving foreign currency, and the time the actual contractual commitment is made.

Français: Risque monétaire (antérieur au contrat ou ante-natal) Espa ٌ◌ol: Riesgo cambiario previo al contrato

Current account (external trade):

See Balance of payments.

Français: Compte courant Espa ٌ◌ol: Cuenta corriente

Current assets:

Cash, bank deposits and other assets which can readily (within one year) be turned into cash, such as Bills, Accounts receivable, stock, Marketable securities. Opposite: Fixed assets.

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Français: Actifs circulants Espa ٌ◌ol: Activo corriente, activo circulante

Current account credit:

If a bank's client draws funds beyond the amount available in his account, he overdraws his account. This overdraft can, in the case of good client, be converted into a current account credit by which the client may draw funds at any time, up to an agreed limit within the contractual period. This facility is particularly useful to cover the changing credit needs of corporate clients. It may take the form of secured or unsecured loan.

Français: Crédit en compte courant Espa ٌ◌ol: Crédito en cuenta corriente

Current liability:

Any liability which must be honoured within one year.

Français: Dette courante Espa ٌ◌ol: Current liability

Current liabilities:

Liabilities due to be paid within one year from the balance sheet date, for example Dividends, taxes, Trade creditors (UK) / Accounts payable (US).

Français: Dettes courantes Espa ٌ◌ol: Pasivo circulante, pasivo corriente, pasivo exigible a corto plazo, obligaciones a corto plazo

Current ratio:

A Liquidity ratio expressed as the ratio between a business' Current assets and its Current liabilities. It is a measure of a company's liquidity which may be used in comparing it with another company or in order to examine its evolution over time. A high current ratio indicates a larger liquidity and thus a greater ability to meet unexpected payments. It may however mean that the company’s resources are inefficiently tied up in unproductive assets, such as cash or debtors. See also Acid test.

Français: Coefficient de liquidité Espa ٌ◌ol: Coeficiente de solvencia

Current yield:

This measures the annual income return on a particular security, expressed as an annual percentage: Current yield(%) = Coupon/(Net price*100)

Français: Rendement courant Espa ٌ◌ol: Rendimiento corriente

Cushion bonds:

High-coupon bonds which sell at only a moderate Premium because they are callable at a price below that at which a comparable non-callable bond would sell.

Français: Obligations à taux d'intérêt élevé Espa ٌ◌ol: Bono amortiguador

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The national authorities charged with the collection of the duties levied by a country on imports and exports. The term may also indicate the procedures involved in such collection.

Français: Douane Espa ٌ◌ol: Aduana

Customs house broker:

An individual or firm licensed to clear goods at the Customs.

Français: Courtier en douane Espa ٌ◌ol: Agente de aduanas

Customs Union (CU):

A regional trade agreement whereby member countries agree to remove any tariff and customs barriers on intra-regional trade and to set up a common external tariff on imports from countries outside the Union.

Français: Union douanière Espa ٌ◌ol: Uni َ◌n aduanera

Cutoff date:

This is established at the time of a country's first Paris Club Debt rescheduling. "Post-cutoff date debts", i.e. loans contracted after the cutoff date, are not eligible for rescheduling and have priority in debt servicing over "pre-cutoff date debts".

Français: Date de fermeture, de clôture Espa ٌ◌ol: Fecha lيmite

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D D/A:

Abbreviation for Documents against acceptance.

Français: D/A Espa ٌ◌ol: D/A

Date Draft:

A draft which matures a specified number of days after its date of issue, regardless of the date of its acceptance. Compare with Sight draft, Time draft.

Français: Date d'échéance de la traite Espa ٌ◌ol: Giro fechado

Day-to-day money:

See Call money.

Français: Argent au jour le jour Espa ٌ◌ol: Day-to-day money


A person, or a company, who buys securities for his own account (at his Bid price) or sells them from his own account (at his asked price). Compare with Broker.

Français: Courtier Espa ٌ◌ol: Vendedor, agente, concesionario, revendedor, expendedor, detallista, agente de valores


A term indicating a fixed-interest Bond secured against the issuing company’s assets (these may consist either of specific assets of the company or of its assets in general). Debenture bonds are distinct from ordinary bonds, the latter being unsecured. Debentures will be paid whether the issuing company makes a profit or not and, in case of Liquidation, debenture holders have priority over ordinary bond holders on the company's remaining assets. Debentures can be bought and sold on a stock Exchange.

Français: Obligation, reconnaissance de dette Espa ٌ◌ol: Obligaci َ◌n

Debt-equity ratio:

The ratio of a company's long-term liabilities (debts) to its Equity (i.e. shareholders' funds). The higher the ratio, the greater the financial Leverage/Gearing of the firm.

Français: Coefficient fonds propres/endettement, Ratio fonds propres/endettement Espa ٌ◌ol: Relaci َ◌n entre deuda y recursos propios, raz َ◌n entre deuda y capital, relaci َ◌n de obligaciones a patrimonio

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Debt ratio:

The ratio of a company's long-term liabilities (debts) to its total long-term capital employed, i.e. debt plus Equity. See also Gearing.

Français: Coefficient, Ratio d'endettement Espa ٌ◌ol: Coeficiente de endeudamiento

Debt refinancing:

The procedure by which overdue payments or future debt-service obligations on an Officially supported export credit are repaid by setting up a new refinancing loan. Such a loan may be extended by an Export credit agency, a governmental institution or a commercial bank. In the latter case it will carry the guarantee of the export credit agency.

Français: Refinancement de la dette Espa ٌ◌ol: Refinanciaci َ◌n de la(s) deuda(s)

Debt rescheduling:

In general, the procedure of readjustment of the terms applying to the existing liabilities of a company or a country, such as a reduction of the interest rates applied and/or an extension of the time required for payment.

(1) In an Export credit agency, the term refers to the procedure by which overdue payments or future debt-service obligations on a existing officially supported export credit are converted into a claim by the export credit agency on the debtor country carrying a revised stream of payments.

(2) In the case of heavily indebted developing countries, it indicates the agreement between debtor and creditor countries to modify the terms of the loan when the borrowing country experiences serious debt-servicing problems. Rescheduling may take the form of an extension of the debt maturity date, delayed loan principal payments, reduction of the interest rate, transformation of short-term credits into medium- or long-term lending, etc. See also London Club and Paris Club.

Français: Ré-échelonnement de la dette Espa ٌ◌ol: Reescalonamiento (del servicio) de la deuda, renegociaci َ◌n de los vencimientos de la deuda

Debt restructuring:

A general term covering both the rescheduling or refinancing of debt-service payments in arrears and/or of future debt-service payments, in response to external payment difficulties.

Français: Restructuration de la dette Espa ٌ◌ol: Reestructura de deuda, renegociaci َ◌n de los pagos (del servicio) de la deuda

Debt-Service Ratio:

The ratio of a country's repayments on its foreign debt to its hard-currency export earnings. This ratio is calculated by dividing the sum of the debt repayments (principal and interest) during a reference year by the country's exports for that year. The debt/service ratio is one of the criteria used to measure a country's creditworthiness.

Français: Coefficient : dette-service de la dette Espa ٌ◌ol: Proporci َ◌n del servicio a la deuda, coeficiente del servicio a la deuda

Debt Servicing:

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The payment of current interest on borrowed funds, together with the repayment of the principal amount when due.

Français: Service de la dette Espa ٌ◌ol: Servicio de la deuda

Deep discount bonds:

Created in the 1970s and used by companies seeking to maximize their immediate Cash flow and investors keen to avoid taxation. These are bonds which carry little or no interest but are sold by the issuing company at a price well below their face value.

Français: Obligations très largement escomptées Espa ٌ◌ol: Bono de descuento intensivo, pagaré de descuento intensivo


The failure to repay a loan on schedule or to make timely payment of interest. If the borrower defaults, his bank will initiate certain legal actions to recover its money or seize the security pledged as collateral for the loan.

Français: Défaut Espa ٌ◌ol: Incumplimiento

Default interest:

The interest rate charged on an overdue debt, from the date of Default to the date of (eventual) settlement.

Français: Intérêt de défaut Espa ٌ◌ol: Intereses por mora


A financing technique used by large companies to borrow money without showing it on their balance sheets. The funds borrowed by the company are used to buy government securities and the income from such securities is used to meet the servicing costs of borrowing. Both the initial borrowing and the securities purchased with it are then tied up in a trust external to the company’s balance sheets.

Français: Defeasance Espa ٌ◌ol: Anulaci َ◌n, revocaci َ◌n

Deferred call:

A clause which prohibits the issuing company from calling the Bond before a certain date.

Français: Appels différé Espa ٌ◌ol: Pago diferido

Deferred letters of credit:

A Letter of credit calling for payment at a fixed future date, where the documents do not need to be accompanied by a draft.

Français: Lettres de crédit différées Espa ٌ◌ol: Carta de crédito diferida

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Deferred payment credit:

An arrangement under which payments due to the exporter on presentation of the shipping documents are deferred for an agreed period of time.

Français: Paiement de crédit différé Espa ٌ◌ol: Crédito con pagos diferidos

Deferred stocks:

Shares where payment of the coupon is deferred. It also refers to a stock where market appreciation is expected at a later stage.

Français: Actions différées Espa ٌ◌ol: Acciones diferidas


This signifies "in the red", a financial shortfall. For instance, a government will experience a budget deficit when its expenditures exceed its revenues during the reference financial year.

Français: Déficit Espa ٌ◌ol: Déficit


Opposite of inflation. i.e. a sharp decline in prices, leading to an improvement in the purchasing power of money, brought about by a decrease in the amount of money in circulation relative to the goods and services available in the economy. It is usually accompanied by a contraction in capital spending and investment.

Français: Déflation Espa ٌ◌ol: Deflaci َ◌n

Delivered/duty paid, DDP:

A pricing term indicating the maximum obligation of the exporter to deliver the goods and pay the corresponding duties. The term may be used irrespective of the actual mode of transport. If the parties wish to exclude some charges (such as value-added tax or other similar taxes) from the exporter's obligations, they should explicitly state so by adding words to this effect (such as "exclusive of VAT and/or taxes").

Français: Livré / taxe payée Espa ٌ◌ol: Entregado derechos pagados, DDP

Delivered at frontier:

The exporter fulfils his obligations by delivering the goods at the border of the country of destination, but before the "customs border", i.e. without undertaking the customs clearance formalities. The term usually applies to goods transported by rail or road but may be used also in connection with other modes of transport.

Français: Livré à la frontière Espa ٌ◌ol: Entregada en frontera, DAF

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F.O.B. or C.I.F. delivery of the goods.

Français: Livraison Espa ٌ◌ol: Entrega

Delivery period:

The time required to deliver the exported goods, extending from the signature of the sale contract to the actual delivery of the merchandise.

Français: Période de livraison Espa ٌ◌ol: Plazo de entrega

Demand draft:

A payment order payable upon presentation.

Français: Traite à vue Espa ٌ◌ol: Giro a la vista

Demand line of credit:

A line of credit arranged by a bank, enabling its clients to borrow on a daily or an on-demand basis.

Français: Ligne de crédit à vue Espa ٌ◌ol: Lيnea de crédito a la vista


The extra time required to load or unload a vessel, as compared with that specified in the contract. The term refers only to those situations in which the charterer or shipper, rather than the vessel's operator, is at fault.

Français: Surestarie Espa ٌ◌ol: Sobrestadيa, gastos de sobrestadيa, detenci َ◌n en muelle


The term may be used to indicate the condition of a country which relies excessively on the sale of one primary commodity and/or is too dependent on another country as a customer and supplier.

Français: Dépendance Espa ٌ◌ol: Dependencia

Deposit of estimated duties:

In an Antidumping procedure, the term indicates the duties to be collected on imported merchandise found to be subject to Dumping.

Français: Dépôt de taxes estimées Espa ٌ◌ol: Consignaci َ◌n de aranceles estimados

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On the balance sheet of a company, the funds accepted from customers or banks are generally indicated as deposits. See also: Receivables, Advances and loans.

Français: Dépôts Espa ٌ◌ol: Dep َ◌sitos


(1) In financial markets, the decrease in the value of an asset due either to real factors (i.e. the worsening of its revenue prospects) or often simply to fear.

(2) In accounting, the amount allocated each period to Amortize the book value of fixed assets.

(3) On the foreign exchange markets, the decrease in the market value of a currency, where this decrease has taken place without any intervention by the country's monetary authorities. Compare with Devaluation.

Français: Dépréciation Espa ٌ◌ol: Depreciaci َ◌n, amortizaci َ◌n


A long-lasting recession in economic activity.

Français: Dépression Espa ٌ◌ol: Depresi َ◌n, crisis econ َ◌mica


The removal of government control on the conduct of economic activity in a particular sector, typically taking the form of rules or price controls. It implies that market forces take effect without any government restrictions.

Français: Déréglementation Espa ٌ◌ol: Desreglamentaci َ◌n, liberalizaci َ◌n


Securities contracts whose prices are based on the price of an underlying asset (such as goods, securities, foreign currency, etc.) already quoted on the market; e.g. Futures, Options.

Français: Dérivés Espa ٌ◌ol: Derivado


The official decision by a country’s monetary authorities to reduce the value of the domestic currency in relation to foreign currencies, i.e. to reduce the foreign currency equivalent of the domestic currency. e.g. if the U.S. dollar is devalued in relation to the French franc, one dollar will "buy" fewer francs than before. Opposite: Revaluation. Compare with Depreciation.

Français: Dévaluation Espa ٌ◌ol: Devaluaci َ◌n

Development Bank:

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A lending agency which provides financial assistance for the promotion of a country’s industrial and trade activity. Development banks are typically active in developing countries.

Français: Banque de développement Espa ٌ◌ol: Banco de desarrollo

Development carve-out:

A portion of the product payment estimated to cover the development costs (intangible expenses) of an oil or gas well or mine.

Français: Développement "carve-out Espa ٌ◌ol: Desarrollo indirecto

Development carve-out loan:

A loan secured by a Development carve-out.

Français: Prêt de développement "carve-out Espa ٌ◌ol: Préstamos para dsarrollos indirectos

Development Finance Institutions (DFIs):

DFIs are set up to support the undertaking of industrial and development projects through the extension of long-term loans on more favourable conditions than those offered by commercial banks. DFIs are usually also willing to take greater risks than commercial banks. They include Development banks and industrial finance corporations.

Français: Institutions pour le développement financier Espa ٌ◌ol: Instituci َ◌n de financiaci َ◌n del desarrollo, banco de fomento

Direct costs:

The term refers to costs which can be directly related to the production of particular units or lines of products. They include the wages of the personnel and the cost of inputs used in the manufacture of such products.

Français: Coûts directs Espa ٌ◌ol: Costos directos, costo neto

Direct Credit:

A financing arrangement (buyer or supplier) provided directly by an ECA to the importer or exporter as borrower.

Français: Crédit direct Espa ٌ◌ol: Crédito directo

Direct lease:

A lease in which the lessor purchases new equipment from the manufacturer and leases it to the lessee.

Français: Bail direct Espa ٌ◌ol: Contrato de arrendamiento directo

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Direct payment:

Payments owed by the buyer which must be settled in cash during the contractual period, not being eligible for financing under a buyers or suppliers' credit.

Français: Paiement direct Espa ٌ◌ol: Pago directo

Direct quote:

In foreign exchange operations, the number of units of the domestic currency required to buy one unit of a foreign currency. Compare with Indirect quote. See also Quoted currency.

Français: Cotation directe Espa ٌ◌ol: Cotizaci َ◌n directa

Direct yield:

See Yield.

Français: Rendement direct Espa ٌ◌ol: Rendimiento directo

Dirty float:

A system of floating exchange rates where the domestic monetary authorities occasionally intervene to manage and control the exchange rate by buying or selling domestic currency against foreign Reserve currencies. In a Clean float, no intervention is used.

Français: Fluctuations contrôlée Espa ٌ◌ol: Flotaci َ◌n sucia, flotaci َ◌n impura, flotaci َ◌n manipulada


In the securities market, a situation where the market price of a security is lower than its nominal or par value. In foreign exchange operations, the discount charged for exchanging a depreciated foreign currency or for exchanging abraded or used coins. Opposite: Agio.

Français: Disagio Espa ٌ◌ol: Desagio


A term used in accounting and finance to indicate the actual cash disbursements.

Français: Déboursement Espa ٌ◌ol: Desembolso


(1) In commercial trade, a rebate in the selling price of goods or services, usually made by deducting a certain percentage from the quoted price.

(2) In finance, the deduction from the face value of Commercial paper such as a Bill of exchange or acceptance, in exchange for the option of receiving the relative cash payment before the maturity of the paper. By purchasing at a

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discount, the buyer of the commercial paper is compensated for the loss of interest on the funds up to the paper’s maturity.

(3) When referring to the selling price of a bond or other security, this indicates a market price below its par value.

(4) In accounting, the calculation of the present value of a stream of future Cash flows. It is the opposite of Compounding.

(5) In foreign exchange trading, a foreign currency sells at a discount on the forward market when the forward rate is lower than the spot rate (assuming that the domestic currency is quoted on a direct basis), i.e. that it is cheaper to buy the foreign currency forward rather than spot.

Français: Escompte Espa ٌ◌ol: Descuento

Discount credit:

A credit by a bank for the provision of funds when the client presents a Bill of exchange or similar Commercial paper for discounting.

Français: Crédit escompte Espa ٌ◌ol: Lيnea de descuento

Discount rate:

(1) The interest rate at which a bank or other lender agrees to make advance payments to the holder of a bill of Exchange or other Commercial paper, i.e. the deduction from its face value practised by the bank. It is thus a charge on the person or company seeking to discount his bills, and depends on the time left until the maturity of the instrument, the liquidity of the financial markets, etc.

(2) The interest rate at which a country’s Central Bank lends to commercial banks, when these are temporarily short of funds. Commercial banks need to pledge government and other first-class debt instruments as collateral to borrow from their Central Bank. Such borrowings are of a short-term nature as they are meant to meet the short-term liquidity needs of commercial banks.

Français: Taux d'escompte Espa ٌ◌ol: Tipo de descuento

Discount window:

A facility offered by a county’s Central Bank by which commercial banks may borrow short-term (at the Discount rate), for instance in order to adjust to sudden changes in their assets and liabilities portfolio.

Français: Facilité d'escompte Espa ٌ◌ol: Servicio de redescuento

Discounted cash flow:

The present value of future Cash flows, taking into account the timing of the future stream of payments. Take an example of an anticipated cash flow of £100. Its present value is lower, as it could be invested and earn interest. If a current investment of £92 is worth £100 by the end of the year, the discounted cash flow value of the anticipated £100 would be £92. Discounted cash flows are used when comparing alternative investment options, entailing different payment and revenue time structures. See also Capitalized value.

Français: Flux de trésorerie escomptés Espa ٌ◌ol: Flujo de efectivo actualizado

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Refusal on the part of the drawee to accept a draft or to pay it when due.

Français: Ne pas honorer Espa ٌ◌ol: Falta de pago, falta de aceptaci َ◌n


The process of excluding banks and other financial institutions from the collection and allocation of financial resources in the economy. Disintermediation may take different forms, for example the decision of companies to rely on bond and Equity issues rather than on bank loans to finance their activities.

Français: Désintermédiation Espa ٌ◌ol: Desintermediaci َ◌n


An amount paid by a vessel's operator to a charterer, if the loading or unloading of the vessel is completed more quickly than was stipulated in the charter agreement.

Français: Prime de rapidité Espa ٌ◌ol: Prima de celeridad, prima por pronta carga y descarga

Disposable income:

Income (cash) after tax.

Français: Revenu disponible Espa ٌ◌ol: Ingresos disponibles


An Agent who sells directly on behalf of and according to the instructions of the supplier and maintains an inve