Cable To Closed-End Funds (Money)


It’s City slang for the exchange rate between the US dollar and the UK pound.


When the City bods are calling you, it’s not just for a friendly social chat. It means they want money, specifically your money. There are situations when you are given the right to buy shares or whatever now, but you can pay in the future (see Nil-Paid Rights, Partly-Paid Shares). When you finally have to dip your hand into your wallet, you are ‘called’ for the money. Quaint isn’t it? If you were delirious enough to dabble in futures, and the bet you made was going against you, the broker you dealt with would sternly issue you with a margin call (see Margin Call). In this case he or she would want more money to act as collateral on the bet, just in case you lose your shirt. Don’t get confused between the above and a call option. They are not the same (see Call Option, Derivatives).

Called-Up Share Capital

Accounting-speak. This is the money initially invested into a business. It describes the amount of the authorized share capital of a company that has been issued to investors and paid for (see Authorized Share Capital). Let’s suppose that the shares in a company have a face value of 10p each. If one million shares are issued or ‘called up’, that equals £100,000 worth of called-up share capital.

Any surplus paid over and above the face value of the shares forms part of the company’s reserves (see Capital and Reserves, Reserves, Share Premium Account).

Call Option

The right, but not the obligation, to buy a share (or any other financial instrument, like a currency) within a defined period of time in the future, at a price that is fixed now (see Derivatives -Options, Put Option).


Money invested in things like your house, car or shares, etc is called capital. Capital growth describes the increase in value of investments, usually over time. To bean-counters (the dreaded accountants), capital is the money invested in a business (see Income).

Capital Account

Economic-speak. This describes how much money comes into and out of a country for long-term investment purposes (see Current Account).

Capital Adequacy

Companies that are involved in financial services like stock-broking, banking, etc are required to hold a minimum amount of cash in the kitty, which by anyone’s standards is very large. The amount is calculated to ensure that the company’s capital is adequate for the risks it is taking, and its clients are always protected from those risks.

Capital and Reserves

Accounting-speak (again!). This is essentially called-up share capital and reserves (see Called-Up Share Capital, Reserves). Capital and Reserves then subdivide into things like share capital, share premium, retained profit and other reserves. The only vital thing to note is that all this money belongs to the people who own the business, ie, the shareholders. Fancy names for this money include: equity, shareholders’ equity, shareholders’ funds. If you can bear to read the annual report and accounts of a business listed on the Stock Exchange, you’ll find all these terms feature in the balance sheet page of the document.

Capital Employed

This is an important one, so pay attention! Capital employed is the total amount of long-term money that is being used in a business. This includes its assets, like machines and factories for example, as well as day-to-day cash and stocks, money owed to outsiders and tax owed. All this can add up to a pretty big number. Investors take a very keen interest in capital employed because it tells them how effectively the management is running the business (see Return on Capital Employed).

Capital Gain

In the event that you are fortunate enough to buy something that goes up in value, whether it’s shares or a house, the amount by which it goes up beyond the amount of money you paid for it (meaning you have made a theoretical profit on it) is the capital gain (see Tax – Capital Gains Tax).

Capitalization Issue Cash

This little word needs no explanation. When people say they are highly liquid, they’re not referring to their bender down at the pub! It means that they’ve got lots of lovely cash at their disposal. Cash is an asset, and the more we have, the better. In company accounts, it is described as a current asset because it’s readily usable to pay for things. Shares and bonds are the two other assets that lend themselves to being quickly convertible into cash, that is, as long as they are the best quality ones.

Cash Flow

It’s the ‘real’ money that is actually ringing in the till of a business on a day-to-day basis. It’s different from profits because a business can be theoretically profitable, ie, selling its goods for more than they cost. However, its cash flow might be really bad because, for example, the people buying the goods might take a very long time to pay. So even if a company is profitable, it can still go bust if poor cash flow creates a short-term solvency crisis (see Cash-Flow Statement, Price/Cash Flow Ratio).

Cash-Flow Statement

The cash-flow statement for a business is a bit like your bank statement, which records all the money going in and out of your account over a period of time. This statement clearly shows which bits of the business have brought in cash, and where the incoming money has been spent. Without this information, management wouldn’t know how much money it has at its disposal to spend on expansion of the business, etc (see Accounts, Cash Flow, Profit and Loss Account).

Central Bank

Most countries have a central bank that controls the amount of money printed and in circulation, and keeps a benevolent eye over the financial system, like a watchdog. The Bank of England (see Bank of England) has this hallowed task here, whereas Europe now has the European Central Bank doing the same thing for the euro (see Euro).

Everyone takes serious notice of the American Federal Reserve Bank, which is the most powerful central bank in the world. Presently the big cheese running it is Alan Greenspan. When he speaks, the whole world listens. The City watches like a hawk as he and the Federal Open Markets Committee decide US interest rate policy. His decisions can affect the world stock markets, but thankfully, he seems to judge the mood right pretty much all of the time, which is why he’s definitely achieved ‘guru’ status (see Guru). However, managing the world’s largest economy is a precariously balanced thing. If he gets it slightly wrong, it can have a devastating effect on global confidence, which would have a negative effect on stock markets, and in turn, economies.

Certificate of Deposit – CD

These are like cash. CDs are receipts given by a bank or a discount house for cash deposited with them. Bits of paper issued in bearer form, they entitle the owner to the interest paid. They are tradable and can also be handed over to someone else. Note that a CD for £10,000 is worth £10,000 and shouldn’t be left floating freely around the house. Lock it away into a safety deposit box or the like. Because the sums of money on deposit are quite large, banks use them to get good rates of interest for longer periods of time. Individuals can buy these through a stockbroker, a money broker, a discount house or a bank. CDs are suitable for those with fairly large amounts of money to tuck away (see Bearer Securities).

Chairman’s Statement

When you’re flicking enthusiastically through the accounts of Bloggins plc, this is one of the bits that will help you to suss out whether or not they are doing well. Bad news is frequently wrapped up in careful wording: ‘Results came below our projected expectations’ can sometimes stand for the management making a bit of a pig’s ear of things. If there isn’t a chairman’s statement, there’ll be a directors’ report. If you are really zealous and manage to compare the results of the same company over a few years (yes, I know it’s deadly dull) you’ll also work out whether the chairman is biased towards being too go go go and positive or too glum and gloomy (see Accounts).

Children’s Bonus Bonds

Okay, so it’s fair to assume that these are for children, because of the give-away title. But what are they? Well, they’re one of the government’s National Savings products (See National Savings Certificates), which are equivalent to a building society deposit account with an important plus point. They’re tax-free. You hand the money on behalf of your child over to them and in return get a bit of paper that is like a receipt, thereafter receiving a fixed rate of interest on the sum deposited for five years. Visit the website:

Chinese Walls

You have probably already guessed that these are not real walls. Unlike the Great Wall of China, these are invisible walls that make sure price-sensitive information about a client remains confidential, and within its own department. They are necessary because the various City activities, such as stockbroking, market-making, fund management and corporate finance, are now frequently housed under the same roof. The same company could be giving a company corporate advice about its business strategy, as well as making a market in its shares.

Example: suppose the corporate finance department is advising a company to bid for Bloggins plc. If the stockbrokers in the same firm got to hear about the bid, the temptation might be to recommend Bloggins shares to their clients, or possibly buy some for themselves. Excuse me, insider dealing? Sharp intake of breath. Indignation and vehement protestation ensues. Such dodgy goings on in the City are unthinkable! City firms assure us that their Chinese Walls are as effective as mega-strong flea powder, stopping information hopping from one person to another, and making sure it stays confidential (see Compliance, Inside Information, Insider Dealing).


This is the disreputable and thoroughly awful practice of some, but hopefully not too many, stockbrokers who buy and sell shares on behalf of their clients too frequently, with the mercenary aim of generating commission. If you let someone do this with your share portfolio, it will surely end up in a sloppy gooey mess, that’s if there’s anything left at the end at all. It is why it’s very important to keep a track of what is happening to your money, especially if you’ve entrusted a stockbroker to deal with it on a discretionary basis. This effectively means they have pretty much total control over how they spend your money (see Discretionary – Dealing).

City Code

This came into being because the ever-increasing takeovers of companies on the Stock Exchange led to some rather nasty skulduggery and dirty play by the bosses of the predators that simply wasn’t cricket. To stop companies slugging it out and indulging in dirty tactics when trying to buy other companies, the Takeover Panel was created (see Takeover Panel), which introduced an ethical code of conduct to ensure maximum integrity in future takeovers and stock market flotations, etc.


HM Revenue & Customs – can you countenance it? – can actually claw back money that it previously allowed for tax relief purposes if something happens to alter your entitlement to tax relief. It’s a retrospective imposition of tax. Talk about changing the goal posts!

In the City sense, the word has a more positive meaning, you’ll be glad to know. When a company issues new shares, a clawback entitlement means that existing shareholders are given the right to buy the shares first. Even if the new investors have already bought up all the shares, the existing shareholders can ‘claw’ back their allocation. The corporate broker in charge of the new issue of the shares normally handles this clawback arrangement.

Clearing Banks

They are also known as retail or commercial banks. However, not all retail or commercial banks are clearers. As if you didn’t already know, these banks deal with companies, as well as retail customers like you and me. They take deposits and lend money, some at a better rate than others, and offer a whole panoply of other services, including corporate finance, investment and corporate banking, etc.

Closed-End Funds

A fund is just lots of people’s money pooled into one fund that is managed by a professional fund manager. The important point to register with the closed-end variety is that it only has a fixed amount of units or shares in it, which never changes. The shares of closed-end funds are traded openly on the stock market, so their value goes up and down according to supply and demand; they can trade at a premium (higher than) or a discount to (lower than) the value of the assets in the fund, otherwise known as its net asset value. Investment trusts are closed-end funds (see Investment Trust, Net Asset Value, Open-End Funds).

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