Constant Proportion Portfolio Insurance, or CPPI for short, is a type of investment. People use it to try to make more money while limiting how much they can lose. It’s a little complicated, but we’ll explain it. Special Purpose Entity With CPPI, the first thing that happens is a company is created, called a special…

Constant Proportion Debt Obligations, or CPDOs for short, are a type of investment that some companies set up to make money. The way it works is pretty tricky. Creating a CPDO To start a CPDO, a company will create what’s called a “special purpose entity”. This is basically a separate mini-company that exists just for…

A Constant Maturity Treasury, or CMT for short, is a special interest rate that the Federal Reserve calculates and shares with everyone. The Federal Reserve is like the central bank of the United States. It’s their job to monitor interest rates and the economy. How the CMT works The CMT tells us what the interest…

A constant maturity swap represents a specialized interest rate agreement between two parties. One party agrees to pay a fixed interest rate to another party in exchange for receiving a floating rate based on a constant maturity Treasury (CMT) yield. This financial instrument differs from standard interest rate swaps because it uses Treasury yields rather…

Insurance works differently at Lloyd’s of London than regular insurance companies. Inside Lloyd’s, groups of insurance experts called syndicates team up to handle significant, complex risks together. This teamwork approach is called consortium underwriting, and it’s been around for hundreds of years. When syndicates join forces in a consortium, they’re saying, “We’ll share the work…

Consolidation has two primary meanings in the world of business and finance. Consolidation as a type of merger One meaning of consolidation is when two companies join to create a new company. This is a special kind of merger. In an expected merger, one company buys another company. The bought company stops existing as its…

Consolidated financial statements show a group of companies’ overall financial position and results. They combine the financials of a parent company and all the subsidiaries it controls. What are Consolidated Financial Statements? When a company owns other companies, called subsidiaries, consolidated financial statements combine all their separate financials into one set of statements. This gives…

The consolidated display is something important in the electronic trading of stocks and other securities. It means showing specific required information all together in one place. This is done according to rules and laws about trading. The consolidated display must show the best prices people want to buy and sell a stock for. These are…

A consol is a type of government debt in the United Kingdom. The full name for Consols is Consolidated Fund Annuities. They represent debt that never has to be paid back. This is why we say the debt is “perpetual.” How the UK government issues Consols Consols are part of the UK government’s gilt program….

The concept of consistency is one of the most essential concepts in accounting. It says that a company should use the same accounting methods and measure things the same way each time it makes its financial statements. This lets you compare the statements from different periods to see how the company is doing. Why consistency…