Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

CAP AGREEMENT

A borrowing agreement in which the person who received the loan pays a cap fee so that they can keep the interest rate below a specified limit regardless of the market rate.

CAP AND TRADE

Emissions trading (also known as cap and trade) is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.

CAPABILITY INDEX (CP)

A calculated value used to compare process variation to a specification. Examples are Cp, Cpk. Can also be used to compare processes to each other.

CAPABILITY MAPPING

The analysis of a specific organization’s resources and structures which help identify the potential of the organization.

CAPABILITY MATURITY MODEL INTEGRATION (CMMI)

A framework that describes the key elements of an effective product development and maintenance process. The Capability Maturity Model Integration covers best-practices for planning, engineering and managing product development and maintenance. CMMI

CAPABLE TO PROMISE

Refers to a system that allows an enterprise to commit orders against available capacity, as well as inventory. These systems are evolving to include multiple sites, as well as the entire distribution

CAPACITOR

A capacitor (formerly known as condenser) is a passive electronic component consisting of a pair of conductors separated by a dielectric (insulator).

CAPACITY FACTOR

The net capacity factor of a power plant is the ratio of the actual output of a power plant over a period of time and its output if it had operated at

CAPACITY OVERHEAD EXPENSE

Factoring costs such as insurance, property tax, rent, etc that are associated with owning/operating a specific facility.

CAPITAL

The most important city or town of a country or region, usually its seat of government and administrative center or wealth in the form of money or other assets owned by a

CAPITAL ASSET

An asset that is set to generate income and one depreciation is claimed usually.

CAPITAL FLIGHT

In economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in

CAPITAL INVESTMENT ANALYSIS

The process by which management plans, evaluates and controls long term capital investments involving property, plant and equipment.

CAPITAL MARKET LINE

A relationship within the CAPITAL ASSET PRICING MODEL (CAPM) that relates the expected return of a PORTFOLIO to its expected RISK (as measured through STANDARD DEVIATION). Under CAPM, all investors will choose

CAPITAL NOTE

A NOTE issued by a BANK or bank holding company that can qualify as TIER 2 CAPITAL. To be included in the Tier 2 computation, the security must be structured as a

CAPITAL REORGANIZATION

The act of changing the capital structure of a company by combining or dividing shares to create shares of a different value.

CAPITAL STRUCTURE ARBITRAGE

As a hedge fund strategy it involves structuring trades using different instruments relating to a single issuer. For example taking a long position in the debt of a company while shorting equity

CAPITAL SURPLUS

Capital surplus (also referred to as additional paid in capital, paid in capital in excess of par or share premium, is an accounting term which frequently appears as a balance sheet item

CAPITAL TRANSACTION

A transaction affecting non-current items such as fixed assets, long-term debt, or share capital, rather than revenue transactions.

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