Archives: Terms

Definition of Creative Accounting Creative accounting refers to the manipulation of financial records and reports by companies to present a more favorable view of their financial performance or position than what is actually the case. This can involve various accounting practices that, while not illegal, may be considered ethically questionable. […]

Definition of Crawling Peg Exchange Rates Crawling peg exchange rates represent a type of exchange rate regime in which a country’s currency is adjusted periodically in small amounts at a fixed, or pegged rate, within a narrow band or pursuant to a predefined set of economic indicators. This method is […]

Definition of CPI CPI, or the Consumer Price Index, is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods […]

Definition of Cowles Foundation The Cowles Foundation for Research in Economics is a prestigious research institute affiliated with Yale University. It is dedicated to fostering the development and dissemination of theoretical and applied knowledge in economics. Founded in 1932 by businessman and economist Alfred Cowles, the foundation originally started in […]

Definition of Covered Interest Parity Covered Interest Parity (CIP) is a financial theory that states the relationship between interest rates and the foreign exchange market is such that arbitrage opportunities are eliminated due to forward exchange contracts. According to CIP, the difference in interest rates between two countries is equal […]

Definition of Covariance Stationary Process A covariance stationary process, also known as a weakly stationary process, is a statistical concept used to describe a time series whereby the mean, variance, and autocovariance structure (the covariance of the series with itself at different times) are constant over time. This means that […]

Definition of Covariance Matrix The covariance matrix is a square matrix that captures the covariance (i.e., how much two random variables vary together) between different elements of a random vector. It’s a key concept in statistics and probability theory, providing critical insights into data structure and relationships between variables in […]

Definition of Covariance Covariance is a statistical measure that determines the directional relationship between the returns on two assets. It indicates whether the two move in the same direction (positive covariance) or in opposite directions (negative covariance). In finance, understanding the covariance between different assets can help in portfolio diversification […]

Definition of Cournot Duopoly A Cournot duopoly is an economic model used to describe an industry structure in which two firms produce identical or highly similar products and compete on the quantity of output rather than prices. This model assumes that each firm makes an independent decision about the quantity […]

Definition of Coupon A coupon refers to a voucher entitling the holder to a discount for a particular product or service. Coupons are a widely used promotional tool in marketing, aimed at encouraging consumers to try a new product, clear out old inventory, or simply increase brand loyalty and customer […]