custody. This term may be used for any mode of transport. Carrot equity British slang for an equityinvestment with the added benefit of an opportunity to purchase more equity if the company reaches certain financial goals. Carry Related: Net financing cost. Carry Trade A trade where you borrow and pay interest in order to buy something else that has higher interest. For example, with a positively sloped term structure (short rates lower than long rates), one might borrow at low short term rates and finance the purchase of long-term bonds. The carry return is the coupon on the bonds minus the interest costs of the short-term borrowing. Of course, if long-term interest rates unexpectedly rose(and long-term bond prices fell as a result), the carry trade could become unprofitable. Indeed, if this occured, there could be a number of investors trying to unwind the carry trade, which would involve selling the long-term bonds. It is possible that this could exacerbate the increase in long-term interest rates, i.e. push the rates even higher. Related: Currency Carry Trade. Carryforwards Tax losses allowed to be applied to offset future income in some specified number of future years. Carrying charge The fee a broker charges for carryingsecurities on credit, such as on a margin account. Also, any component of a futures basis, such as storage costs, interest charges or insurance costs on the underlying interest. Carrying costs Costs that increase with increases in the level of investment in current assets. Carrying value Book value. Cartel A group of businesses or nations that act together as a single producer to obtain marketcontrol and to influence prices in their favor by limiting production of a product. The United States has laws prohibiting cartels. Carve out Usually occurs when a company decides to IPO one of their subsidiaries or divisions. The company usually only offers a minority share to the equity market. Also known as equity carve out. Cash The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and banker's acceptances. Cash equivalents on balance sheets include securities that mature within 90 days (e.g., notes). Cash account A brokerage account that settles transactions on a cash-rather than credit-basis. Cash Available for Debt Service Ratio of cash assets to debt service (interest plus nearby principal). Used in evaluating the risk of a project or firm. The higher the ratio the less likely the firm or project will fail to meet its debt obligations. Cash asset ratio Cash and marketable securities divided by current liabilities. See: Liquidity ratios. Cashed-Based Refering to an option or future that is settled in cash when exercised or assigned. No physical entity, either stock or commodity, is received or delivered. Cash basis Refers to the accounting method that recognizes revenues and expenses when cash is actually received or paid out. Cash and equivalents The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as bonds