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l-text">Last updated: 22 Feb, 2017  
SME Glossary
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Glossary of Export Import Trade Terms Starting with - C
Words   Description
"CFR"- Cost And Freight In this term the exporter bears the cost of carriage or transport to the selected destination port, in this term the risk transferable to the buyers at the port of shipment.

Seller: The chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding. On the other hand, the transfer of risks is the same one as in FOB.

Buyer: The buyers supports all the risk of transport, when the goods are delivered aboard by ship at the loading port, buyer receives it from the carrier and takes delivery of the goods from nominated destination port.
"CIF"- Cost, Insurance And Freight CIF- Cost, Insurance and Freight: Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.

This Term involves insurance with FOB price and ocean freight. The marine insurance is obtained by the exporter at his cost against the risk of loss or damage to the goods during the carriage.

Seller: The CFR extends additional obligation to the seller for providing a maritime So insurance against the risk of loss or damage to the goods. The seller pays the insurance premium.

Buyer: He supports the risk of transportation, when the goods have been delivered aboard the ship at the loading port. He takes delivery of the goods from the carrier to the appointed port or destination.
"CIP"- Carriage And Insurance Paid To CIP- Carriage and Insurance Paid To: Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.
This term is similar to Carriage Paid To but the seller has to arrange and pay for the insurance against the risk or loss or damage of the goods during the shipment.

Seller: The seller or buyer has to provide insurance and seller pays the freight and insurance premium.

Buyer: The buyer or importer supports the risks of damages or loss, as goods are given to the first carrier. The buyer has to pay customs clearance and unloading charges.
"CPT"- Carriage Paid To CPT- Carriage Paid To: Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation.
This term uses land transport by rail, road and inland waterways. The seller and exporter are responsible for the carriage of goods to the nominated destination and have to pay freight up the first carrier.

Seller: The seller or exporter controls the supply chain after paying customs clearance for export. Seller or Exporter select the carrier and pay the expenses up to the destination.

Buyer: The risks of goods damages or loss are supported by the buyer as goods are given by the first carrier. The buyer or importer has to pay importation customs clearance and the unloading costs.
CAA Clean Air Act (USA)
CHIPS (Clearing House Interbank Payments System) Financial network through which banks in the United States conduct their financial transactions.
CITES Convention on the International Trade in Endangered Species
CTD WTO Committee on Trade and Development
Call Option The right to buy the underlying currency at a specified price and on a specified date.
Capital (Financial) Structure The proportion of debt and equity and the particular forms of debt and equity chosen to finance the assets of the firm.
Capital Account A measure of change in cross-border ownership of long-term financial assets, including financial securities and real estate.
Capital Asset Pricing Model (CAPM) An asset pricing model that relates the required return on an asset to its systematic risk.
Capital Budgeting Planning and managing expenditures for long-lived assets.
Capital Formation The process of increasing the amount of capital goods - also called capital stock - in a country.
Capital Gain The positive change in the value of an asset, a negative capital gain is a capital loss.
Capital Market Line The line between the risk-free asset and the market portfolio that represents the mean-variance efficient set of investment opportunities in the CAPM.
Capital Markets Markets for financial assets and liabilities with maturity greater than one year, including long-term government and corporate bonds, preferred stock, and common stock.
Capital Rationing The case where funds are limited to a fixed dollar amount and must be allocated among the competing projects.
Capital Structure The mix of the various debt and equity capital maintained by a firm. Also called financial structure. The composition of a corporation's securities used to finance its investment activities; the relative proportions of short-term debt, long-term debt, etc. 
Capitalism An economic system that is based on private ownership; economic development is proportionate to and dependent upon the accumulation and reinvestment of profits.
Carnet A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries without paying duties or posting bonds.
Carrier An individual or entity that transports persons or goods for compensation under the contract of carriage.
Cartel An agreement among, or an organization of, suppliers of a product.
Cash Against Documents (CAD) Payment for goods where a commission house or other intermediary transfers title documents to the buyer upon payment in cash.
Cash Cover In a letter of credit transaction, money deposited by the applicant with the issuing bank.
Cash Flow Cash generated by the firm and paid to creditors and shareholders. It can be classified as (1) cash flow from operations, (2) cash flow from changes in fixed assets, and (3) cash flow from changes in net working capital.
Cash in Advance (CIA) Payment for goods in which the price is paid in full before the shipment is made. This type of payment is usually only made for very small shipments or when goods are made in order.
Cash with Order (C.W.O.) Payment for goods in which the buyer pays when ordering and in which the transaction is binding on both parties.
Centrally Planned Economy An economy in which the government, rather than free-market activity, controls the allocation of resources.
Certificate of Acceptance Term used in leasing. A document whereby the lessee acknowledges that the equipment to be leased has been delivered, is acceptable, and has been manufactured or constructed according to specifications.
Certificate of Analysis/certificate of Inspection Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or conformity to specifications.
Certificate of Inspection A document certifying that merchandise was in good condition immediately prior to its shipment.
Certificate of Manufacture A statement that is usually notarised in which the producer of goods certifies that the goods have been produced and are now available to the buyer.
Certificate of Origin Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the goods.
Certificate of Product Origin A document required by certain foreign countries for tariff purpose, certifying the country of origin of specified goods.
Change in Net Working Capital Difference between net working capital from one period to another.
Characteristic Line The line relating the expected return on a security to different returns on the market.
Charter Party Written contract between the owner of a vessel and a "chartered" who rents use of the vessel or a part of its freight space.
Civil Society Organizations (CSOs) Non-governmental and non-profit groups that work to improve society and the human condition.
Clean Bill of Lading A receipt for goods issued by a carrier that indicates that the goods were received in apparently good order and without damage.
Clean Collection Collection in which only the financial document is sent through the banks.
Clean Draft A draft to which no documents have been attached.
Clearance The completion of customs entry requirements that results in the release of goods to the importer.
Clearing The settlement of a transaction, often involving exchange of payments and/or documentation.
Closed-End Fund A mutual fund in which the amount of funds under management is fixed and ownership in the funds is bought and sold in the market like a depository receipt.
Codex Codex Alimentarius Commission (a world food standards body)
Collection Order In a collection, the document in which the seller instructs the banks as to how the collection is to be conducted.
Collection Papers All documents submitted to a buyer for the purpose of receiving payment for a shipment.
Command Economy An economy based on government ownership and/or control of society's resources; during the 20th century, the dominant form of command economy was communism.
Commercial Attachment The commerce expert on the diplomatic staff of his/her country's embassy or large consulate.
Commercial Document General term for documents describing various aspects of a transaction, e.g. commercial invoice, transport document, insurance document, certificate of origin, certificate of inspection etc.
Commercial Invoice An itemized list of goods shipped, usually among an exporter's COLLECTION PAPERS.
Commodity Price Risk The risk of unexpected changes in a commodity price, such as the price of oil.
Commodity Swap A swap in which the (often notional) principal amount on at least one side of the swap is a commodity such as oil or gold.
Common Carrier An individual, partnership, or corporation that transports persons or goods for compensation.
Comparative Advantage A comparative advantage exists when a nation or economic region is able to produce a product at a lower opportunity cost compared to another nation or region.
Compliant Documents Documents presented under a letter of credit that comply with all its terms and conditions. The banks are only obliged to pay the beneficiary if documents are totally compliant.
Compound Interest Interest that is earned both on the initial principal and on interest earned on the initial principal in previous periods. The interest earned in one period becomes in effect part of the principal in a following period.
Compound Value Value of a sum after investing it over one or more periods. Also called future value.
Compounding Process of reinvesting each interest payment to earn more interest. Compounding is based on the idea that interest itself becomes principal and therefore also earns interest in subsequent periods.
Confirmation of Letter of Credit A letter of credit, issued by a foreign bank, whose validity has been confirmed by a Nationalized Indian bank.
Confirming Bank Bank that adds its payment undertaking to a letter of credit.
Consignee Party to whom goods are to be delivered.
Consignment Delivery of merchandise from an exporter (consignor) to an agent (consignee) under agreement that the agent sell the merchandise for the account of the exporter.
Consolidated Income The sum of income across all of the multinational corporation's domestic and foreign subsidiaries.
Consolidation A form of corporate reorganization in which two firms pool their assets and liabilities to form a new company.
Consular Invoice A document, required by some foreign countries, describing a shipment of goods and showing information such as the consignor, consignee, and value of the shipment.
Consular Statement A document required by some foreign countries, describing a shipment of goods and showing information such as the consignor, consignee, and value of shipment. Certified by a consular official of the foreign country, it is used by the country's officials
Contingency Insurance Contingency insurance protects the exporter in any situation in which exporter responsibility relied on the buyer to insure, but sustained a loss because of inadequate coverage from that source. It will cover situations in which the FOB endorsement.
Contingent Claim Claim whose value is directly dependent on, or is contingent on, the value of its underlying assets. For example, the debt and equity securities issued by a firm derive their value from the total value of the firm.
Continuous Compounding Interest compounded continuously, every instant, rather than at fixed intervals.
Continuous Quotation System A trading system in which buy and sell orders are matched with market makers as the orders arrive, ensuring liquidity in individual shares.
Contract Manufacturing A firm allowing another firm to manufacture a pre-specified product.
Contribution Margin Amount that each additional product, such as a jet engine, contributes to after-tax profit of the whole project: (Sales price - Variable cost) X (1 - T), where T is the corporate tax rate.
Controlled Foreign Corporation (CFC) In the U.S. tax code, a foreign corporation owned more than 50 percent either in terms of market value or voting power.
Convertible Bonds Bonds sold with a conversion feature that allows the holder to convert the bond into common stock on or prior to a conversion date and at a pre specified conversion price.
Convertible Currency A currency that can be bought and sold for other currencies at will.
Convex Tax Schedule A tax schedule in which the effective tax rate is greater at high levels of taxable income than at low levels of taxable income. Such a schedule results in progressive taxation.
Corporate Culture The set of values, beliefs, relationships between individuals and functions that guide the decisions of a company to achieve its objectives.
Corporate Governance The way in which major stakeholders exert control over the modern corporation.
Corporate Social Responsibility The responsibilities that corporations (including MNCs) have to workers and their families, to consumers, to investors, and to the natural environment.
Corporation Form of business organization that is created as a distinct "legal person" composed of one or more actual individuals or legal entities. Primary advantages of a corporation include limited liability, ease of ownership, transfer, and perpetual succession.
Corporation (Private) Any corporation which is organized for the purpose of establishing, operating and maintaining a foreign-trade zone and which is chartered under a special act of the State within which it is to operate such a zone.
Corporation (Public) A State, political subdivision thereof, a municipality, a public agency of a State, political subdivision thereof, or municipality, or a corporate municipal instrumentality of one or more States.
Correlation A measure of the co variability of two assets that is scaled for the standard deviations of the assets (rAB = sAB / sAsB such that -1 < rAB < +1).
Correspondent Bank A bank that, in its own country, handles the business of a foreign bank.
Corruption Perceptions Index (CPI) A ranking of countries by level of corruption that is researched and published by Transparency International (TI), the world's leading non-governmental organization dedicated to fighting corruption.
Cost And Freight (C & F) A pricing term indicating that the cost of the goods and freight charges are included in the quoted price.
Cost and Freight (C&F) A pricing term that indicates that the cost of the goods and freight charges are included in the quoted price.
Cost and Insurance (C & I) A pricing term indicating that the cost of the product and insurance are included in the quoted price.
Cost of Equity Capital The required return on the company's common stock in capital markets. It is also called the equity holders' required rate of return because it is what equity holders can expect to obtain in the capital market. It is a cost from the firm's perspective.
Cost, Insurance, Freight A pricing term indicating that the cost of the goods, insurance, and freight are included in the quoted price.
Counter Credit Another name for back-to-back letter of credit.
Counter Trade The sale of goods or services that are paid in whole or in part by the transfer of goods or services from a foreign country.
Countervailing Duties Duties levied on an imported good that has been unfairly subsidized by a foreign government. Imposing duties on the good is meant to raise the product's price to a "fair market value".
Country Risk The political and financial risks of conducting business in a particular foreign country.
Coupon The stated interest on a debt instrument.
Coupon Swap A fixed-for-floating interest rate swap.
Covariance A measure of the co variability of two assets (sAB = sAsB rAB).
Cover Note Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.
Credit Risk Insurance Insurance designed to cover risks of nonpayment for delivered goods.
Cross-Hedge A futures hedge using a currency that is different from, but closely related to, the currency of the underlying exposure.
Culture Collective mental paradigms that a society imparts to individuals in the form of behavior patterns, shared values, norms and institutions.
Cumulative Translation Adjustment (CTA) An equity account under FAS #52 that accumulates gains or losses caused by translation accounting adjustments.
Currency (Foreign Exchange) Risk The risk of unexpected changes in foreign currency exchange rates.
Currency Coupon Swap A fixed-for-floating rate no amortizing currency swap traded primarily through international commercial banks.
Currency Cross-Hedge A hedge of currency risk using a currency that is correlated with the currency in which the underlying exposure is denominated.
Currency Option A contract giving the option holder the right to buy or sell an underlying currency at a specified price and on a specified date. The option writer (seller) holds the obligation to fulfill the other side of the contract.
Currency Swap A contractual agreement to exchange a principal amount of two different currencies and, after a prearranged length of time, to give back the original principal. Interest payments in each currency are also typically swapped during the life of the agreement.
Currency of Reference The currency that is being bought or sold. It is most convenient to place the currency of reference in the denominator of a foreign exchange quote.
Current Account A measure of a country's international trade in goods and services.
Current Account Balance A broad measure of import-export activity that includes services, travel and tourism, transportation, investment income and interest, gifts, and grants along with the trade balance on goods.
Custom House Agent (CHA) An individual or firm licensed to enter and clear goods through Customs.
Custom Union A form of regional economic integration group that eliminates tariffs among member nations and establishes common external tariffs.
Customhouse Broker A person or firm obtains the license from the treasury department of its Country when required, and help clients (importers) to enter and declare goods through customs.
Customs The authorities designated to collect duties levied by a country on imports and exports.
Customs Territory Territory of the India in which the general tariff laws of the India apply.
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