What Is Capital at Risk (CaR)? Capital at risk (CaR) refers to the amount of capital set aside to cover risks. It applies to entities and people who are self-insured, as well as to insurance companies that underwrite insurance policies. Capital at risk can be used to pay losses or it can be used by investors
What Is a Capital Share? Capital shares are a share class offered by a dual-purpose fund. In a dual-purpose fund, investors can invest in either capital shares for gains or income shares for dividends. Key Takeaways Capital shares are a share class offered by a dual-purpose fund.In a dual-purpose fund, investors can invest in either
What Is Capital Stock? Capital stock is the amount of common and preferred shares that a company is authorized to issue, according to its corporate charter. Capital stock can only be issued by the company and is the maximum number of shares that can ever be outstanding. The amount is listed on the balance sheet
What Is a Capital Stock Insurance Company? A capital stock insurance company is an insurance company owned by shareholders rather than policyholders. These entities get capital from stockholder contributions, in addition to their surplus and reserve accounts, with the majority of their assets or money coming from the sale of shares. Key Takeaways A capital stock insurance company
What Is Capital Structure? Capital structure is the particular combination of debt and equity used by a company to finance its overall operations and growth. Equity capital arises from ownership shares in a company and claims to its future cash flows and profits. Debt comes in the form of bond issues or loans, while equity
What Is Capital Surplus? Capital surplus, or share premium, most commonly refers to the surplus resulting after common stock is sold for more than its par value. Capital surplus includes equity or net worth otherwise not classifiable as capital stock or retained earnings. In the past, the account Paid-in Capital in Excess of Par – Common
What is a Capital Tax? A capital tax is a tax levied on a corporation that is based on its assets rather than its income. Canada was one of the few OECD nations that levied both a federal and provincial capital tax. Canada limited its federal capital tax to financial corporations in 2006, and some
What Is Capitulation? Capitulation in finance describes the dramatic surge of selling pressure in a declining market or security that marks a mass surrender by investors. The resulting dramatic drop in market prices can mark the end of a decline, since those who didn’t sell during a panic are unlikely to do so soon after.
What Is a Caplet? A caplet is a kind of call option based on interest rates. The typical use of a caplet is to limit the costs of rising interest rates for those corporations or governments that must pay a floating rate of interest on bonds they have issued. However, as with all derivatives, commercial
What Is the Capital Asset Pricing Model? The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk, or the general perils of investing, and expected return for assets, particularly stocks. It is a finance model that establishes a linear relationship between the required return on an investment and risk. The model is based
