Guide to Analysing Companies

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Consumer credit
A loan granted to enable somebody to buy consumer goods
such as cars, washing machines and such like. Many countries
have consumer-credit laws designed to prevent consumers
from being exploited. In the United States, at least 12 different
government agencies are concerned in some way with ensuring
that consumer credit is granted fairly. In most developed
markets, governments insist that lenders quote the rate of in-
terest charged to consumers in a standardised form; in the UK
it is called the annualised preference rate (apr).Yet, as many
consumers find to their cost, such quotes can still be misleading.
Contango
When the prices for future delivery of commodities are
higher than the prices for present delivery. This is the opposite
of backwardation and may be known as forwardation.
Contested bid
See hostile bid.
Continuous linked settlement
A method of settling deals done in the world’s foreign-
exchange markets which has speeded up the time taken to
clear transactions. Before continuous linked settlement, each
party to a transaction to buy, say, dollars and sell Swiss francs
was credited or debited separately and through a different route.
Continuous linked settlement, pioneered by cls bank, has
helped to remove much of the risk of one or other side defaulting
on its payment and of muddles delaying the settlement of trans-
actions. With $2 trillion or so traded each day on the foreign-ex-
change markets (much of it among fewer than a dozen big
banks), delays can become expensive. Under continuous linked
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settlement, cls Bank aims to clear the bulk of bargains struck in
seven main currencies the following day. With ever closer links
between currency and derivatives markets (for example,
when trading in currency options), speed is of the essence.
Contract
In general, a legally binding agreement between two parties that
one will supply goods or services to the other for a specified
price. A contract is also the unit in which options are traded,
usually with an option representing 1,000 shares of the under-
lying security. In futures, a contract is an agreement to buy
or sell specific amounts of a commodity in the future.