What Is a Commodity Swap? A commodity swap is a type of derivative contract where two parties agree to exchange cash flows dependent on the price of an underlying commodity. A commodity swap is usually used to hedge against price swings in the market for a commodity, such as oil and livestock. Commodity swaps allow
What Is a Commodity Trader? A commodity trader is an individual or business that invests in physical substances like oil, gold, or agricultural products. Daily buying and selling are driven by expected economic trends or commodity market opportunities. Commodity markets typically trade in the primary economic sector and most commodity trading involves the purchase and
What Is Common Equity Tier 1 (CET1)? Common Equity Tier 1 (CET1) is a component of Tier 1 capital that is primarily common stock held by a bank or other financial institution. CET1 is a capital measure that was introduced in 2014 as a precautionary way to protect the economy from a financial crisis, largely in
What Is Common Law? Common law is a body of unwritten laws based on legal precedents established by the courts. Common law influences the decision-making process in unusual cases where the outcome cannot be determined based on existing statutes or written rules of law. The U.S. common-law system evolved from a British tradition that spread to North America
What Is a Common Size Balance Sheet? A common size balance sheet is a balance sheet that displays both the numeric value and relative percentage for total assets, total liabilities, and equity accounts. Common size balance sheets are used by internal and external analysts and are not a reporting requirement of generally accepted accounting principles
What Is a Common Size Financial Statement? A common size financial statement displays items as a percentage of a common base figure, total sales revenue, for example. This type of financial statement allows for easy analysis between companies, or between periods, for the same company. However, if the companies use different accounting methods, any comparison
What Is a Common Size Income Statement? A common size income statement is an income statement in which each line item is expressed as a percentage of the value of revenue or sales. It is used for vertical analysis, in which each line item in a financial statement is represented as a percentage of a
What Is Common Stock? Common stock is a security that represents ownership in a corporation. Holders of common stock elect the board of directors and vote on corporate policies. This form of equity ownership typically yields higher rates of return long term. However, in the event of liquidation, common shareholders have rights to a company’s
What Is a Common Stock Equivalent? A common stock equivalent is a security—such as stock options, warrants, convertible bonds, preferred bonds, two-class common stock, and contingent shares—that can be converted into common stock. Sometimes preferred stock can also be converted to common stock. Key Takeaways: A common stock equivalent is a security that can be converted into
What Is a Common Stock Fund? A common stock fund is a mutual fund that invests in the common stock of numerous publicly traded companies. Common stock funds provide investment diversification and offer time savings over researching, buying, and selling individual stocks. Key Takeaways A common stock fund is a fund that invests in the
