Page 24 - PRIAA Glossary

CASCADING
The conversion of a forward contract into a series of shorter- term contracts on maturity.
CASH FLOW
One of the most fundamental tenants of any investing thesis, the expected amounts and timing of the return
or disbursement of cash of investment held. For bonds, represented by interest and principal payments, for stocks, dividend payments and real estate, the timing and amounts of principal and interest payments.
CASH FLOW DURATION
The weighted average of the present value of cash flows or the sensitivity of the value of a given set of cash flows to changes in interest yields.
CASH SETTLEMENT
A settlement method in which the seller of the financial instrument does not deliver the actual underlier or commodity, but instead transfers the associated cash position. It is a common settlement method used when transacting futures and options contracts.
CDS INDEX TRANCHE
A synthetic collateralised debt obligation (CDO) based on
a credit default swap index where each tranche (equity, mezzanine, senior and super senior) references a different segment of the loss distribution of the underlying credit default swap index.
CDX INDICES
A family of credit derivative indices where the underlying reference entities are a defined basket of North American and emerging markets credits. The indices are administered by the CDS Index Company and marketed by Markit Group Ltd. which issues a new series every six months. On the day of issue, the coupon for the whole index is fixed.
22