Page 40 - PRIAA Glossary

CORRIDOR VARIANCE SWAP
A conditional variance swap which accrues realised volatility only when the previous day’s underlying price is between two pre-specified levels.
COST BASIS
The original price of an asset, such as stocks, bonds, mutual funds, property or equipment. Cost basis includes the purchase price and any associated purchase costs and is adjusted for stock splits, dividends and return of capital distributions. Cost basis is needed because tax is due based on the gain in value of an asset.
COST, INSURANCE AND FREIGHT (CIF)
A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination and provide the buyer with the documents necessary to obtain the goods from the carrier. In addition, the seller must procure and pay for the insurance. However, risk is transferred to the buyer once the goods are loaded onto the vessel.
COUNTERPARTY CREDIT RISK
In the context of trading over-the-counter (OTC) derivatives, the risk that a counterparty will fail to meet its obligations due to a deterioration in its credit worthiness.
COUNTRY OF RISK
The domicile of an investment made, representing the impact to the holding from any upheaval experienced by or within the country that may contribute to the value or price volatility of holding that investment vehicle.
COUPON
The rate of interest paid on a security, expressed as a percentage of the principal value or as a floating rate based on a reference rate such as LIBOR. The interest is paid to the holder of the security by the issuer (the borrower). The coupon is generally paid annually, semi-annually or, in some cases, quarterly depending on the type of security.
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